Palo Alto Networks

Positives: disciplined internal reinvestment, sustained R&D (~$2.0B FY25), and strong organic cash returns.

Negatives: elevated stock‑based compensation (≈$1.3B in FY25) and dilution; share repurchases paused in FY25 despite an existing authorization; and a step‑up in M&A size and complexity (pending ~$25B CyberArk, announced ~$3.35B Chronosphere) that increases integration, culture, and execution risk.

While identity and observability are strategically logical adjacencies that could enhance PANW’s data/AI flywheel, the hurdle for value creation is high at these prices. Until synergies are demonstrated and SBC tapers, capital allocation quality sits below our preferred standard for top‑tier compounders.