In the fast-evolving technology sector, Palo Alto Networks, Inc. (PANW) and StoneCo Ltd. (STNE) stand out as key players in software infrastructure. While Palo Alto focuses on global cybersecurity solutions, StoneCo drives fintech innovation mainly in Brazil’s electronic commerce space. Their shared emphasis on cutting-edge technology and market disruption makes this comparison insightful. Join me as we explore which company offers the most compelling investment opportunity in 2026.
Table of contents
Companies Overview
I will begin the comparison between Palo Alto Networks and StoneCo by providing an overview of these two companies and their main differences.
Palo Alto Networks Overview
Palo Alto Networks, Inc. is a leading cybersecurity provider headquartered in Santa Clara, CA. The company focuses on delivering firewall appliances, security management solutions, and subscription services covering threat prevention and cloud security. Operating globally, it serves medium to large enterprises, service providers, and government entities across various industries, emphasizing comprehensive cyber defense and professional services.
StoneCo Overview
StoneCo Ltd. is a financial technology firm based in George Town, Cayman Islands, providing electronic commerce solutions to merchants primarily in Brazil. Its offerings include hyper-local sales and services through Stone Hubs and technology solutions to digital and brick-and-mortar merchants. Serving over 1.7M clients, mostly small and medium-sized businesses, StoneCo focuses on facilitating in-store, online, and mobile commerce.
Key similarities and differences
Both companies operate in the technology sector and are listed on NASDAQ Global Select, but their business models differ significantly. Palo Alto Networks specializes in cybersecurity infrastructure and services targeting large enterprises and government sectors worldwide. In contrast, StoneCo concentrates on fintech solutions with a regional focus on Brazil’s merchant ecosystem, emphasizing payment and commerce technology for smaller businesses and integrated partners.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for Palo Alto Networks, Inc. and StoneCo Ltd. for their most recent fiscal years, using their reported currencies.
| Metric | Palo Alto Networks, Inc. (USD) | StoneCo Ltd. (BRL) |
|---|---|---|
| Market Cap | 128.4B | 3.9B |
| Revenue | 9.22B | 12.74B |
| EBITDA | 1.94B | 6.41B |
| EBIT | 1.60B | 5.72B |
| Net Income | 1.13B | -1.52B |
| EPS | 1.71 | -5.02 |
| Fiscal Year | 2025 | 2024 |
Income Statement Interpretations
Palo Alto Networks, Inc.
Palo Alto Networks showed consistent revenue growth from $4.26B in 2021 to $9.22B in 2025, with net income turning positive after initial losses. Margins improved notably, with a 73.41% gross margin and 12.3% net margin in 2025. Despite a slight decline in net margin growth last year, overall profitability and EPS rose strongly over the period.
StoneCo Ltd.
StoneCo’s revenue increased significantly from BRL 3.17B in 2020 to BRL 12.74B in 2024, but net income remained negative in 2024 at -BRL 1.52B. Gross margin stayed stable around 73.4%, while EBIT margin was favorable at 44.86%. However, net margin deteriorated and EPS declined sharply in the most recent year, reflecting profitability challenges.
Which one has the stronger fundamentals?
Palo Alto Networks exhibits stronger fundamentals with favorable trends in revenue, net income, and margin growth, alongside low interest expenses. StoneCo, despite solid revenue growth and stable gross margins, faces net losses and deteriorating profitability metrics. The overall income statement evaluation favors Palo Alto Networks due to its consistent profitability improvements.
Financial Ratios Comparison
The table below presents key financial ratios for Palo Alto Networks, Inc. and StoneCo Ltd. based on their most recent fiscal year data, enabling a straightforward side-by-side comparison.
| Ratios | Palo Alto Networks, Inc. (2025) | StoneCo Ltd. (2024) |
|---|---|---|
| ROE | 14.5% | -12.9% |
| ROIC | 5.7% | 22.4% |
| P/E | 101.4 | -9.8 |
| P/B | 14.7 | 1.27 |
| Current Ratio | 0.89 | 1.37 |
| Quick Ratio | 0.89 | 1.37 |
| D/E | 0.04 | 1.10 |
| Debt-to-Assets | 1.4% | 23.5% |
| Interest Coverage | 414.3 | 5.57 |
| Asset Turnover | 0.39 | 0.23 |
| Fixed Asset Turnover | 12.6 | 6.95 |
| Payout ratio | 0% | 0% |
| Dividend yield | 0% | 0% |
Interpretation of the Ratios
Palo Alto Networks, Inc.
Palo Alto Networks exhibits a mixed ratio profile with 42.86% favorable metrics, including a strong net margin of 12.3% and excellent interest coverage at 532.53, offset by unfavorable high P/E of 101.43 and low current ratio of 0.89. The company does not pay dividends, reflecting a reinvestment strategy focused on growth and innovation rather than shareholder payouts.
StoneCo Ltd.
StoneCo shows 50% favorable ratios with strong returns on invested capital (22.41%) and solid asset management, despite a negative net margin of -11.89% and a high debt-to-equity ratio of 1.1. Like Palo Alto Networks, StoneCo pays no dividends, likely due to ongoing investments in operations and technology development amid challenging profitability.
Which one has the best ratios?
Both companies have slightly favorable overall ratio evaluations, with StoneCo showing higher favorable metrics but also more significant concerns in profitability and leverage. Palo Alto Networks balances strong profitability indicators against high valuation multiples and liquidity constraints, making the ratio comparison nuanced without a definitive superior.
Strategic Positioning
This section compares the strategic positioning of Palo Alto Networks and StoneCo, including market position, key segments, and exposure to technological disruption:
Palo Alto Networks, Inc.
- Leading cybersecurity provider with significant market cap and moderate competitive pressure.
- Key segments include cybersecurity products, subscriptions, and support services, driving growth.
- Exposed to rapid technological changes in cybersecurity and cloud security innovations.
StoneCo Ltd.
- Financial technology firm focused on Brazil’s SME market with smaller market cap and higher volatility.
- Focuses on electronic commerce solutions for merchants and partners, mainly small-and-medium businesses.
- Faces technological disruption in digital payments and e-commerce platform integration within Brazil.
Palo Alto Networks vs StoneCo Positioning
Palo Alto Networks pursues a diversified approach with multiple revenue streams in cybersecurity, offering stability and broad market coverage. StoneCo concentrates on Brazil’s fintech and e-commerce niche, presenting focused growth opportunities but higher regional risk exposure.
Which has the best competitive advantage?
StoneCo shows a very favorable moat with ROIC well above WACC and growing profitability, indicating a durable competitive advantage. Palo Alto Networks, despite growing ROIC, is currently shedding value with a slightly unfavorable moat status.
Stock Comparison
The stock price movements over the past 12 months reveal contrasting dynamics, with Palo Alto Networks showing a significant overall gain despite recent declines, while StoneCo exhibits a consistent downward trend amid growing trading volumes.
Trend Analysis
Palo Alto Networks, Inc. experienced a bullish trend with a 33.05% price increase over the past year, though recent months show a 14.79% decline and decelerating momentum, accompanied by high volatility (std deviation 19.95).
StoneCo Ltd. displayed a bearish trend with a 13.9% price decrease over the past year, accelerating recently with a further 23.78% drop and lower volatility (std deviation 2.92).
Comparing both, Palo Alto Networks delivered the highest market performance with a strong positive return, while StoneCo’s stock price consistently declined, reflecting weaker investor sentiment.
Target Prices
Analysts show a generally optimistic target consensus for Palo Alto Networks, Inc. and StoneCo Ltd.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Palo Alto Networks, Inc. | 265 | 157 | 231.07 |
| StoneCo Ltd. | 20 | 20 | 20 |
For Palo Alto Networks, the consensus target price of 231.07 USD is notably above the current price of 187.66 USD, suggesting upside potential. StoneCo’s consensus target at 20 USD also exceeds its current price of 14.49 USD, indicating room for growth according to analysts.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Palo Alto Networks, Inc. and StoneCo Ltd.:
Rating Comparison
Palo Alto Networks, Inc. Rating
- Rating: B, evaluated as Very Favorable overall.
- Discounted Cash Flow Score: 4, showing Favorable valuation.
- ROE Score: 4, marked as Favorable for efficient profit use.
- ROA Score: 3, Moderate effectiveness in asset utilization.
- Debt To Equity Score: 4, Favorable financial stability.
- Overall Score: 3, Moderate comprehensive financial standing.
StoneCo Ltd. Rating
- Rating: C, also evaluated as Very Favorable overall.
- Discounted Cash Flow Score: 3, indicating Moderate valuation.
- ROE Score: 1, considered Very Unfavorable for profit efficiency.
- ROA Score: 1, Very Unfavorable asset utilization.
- Debt To Equity Score: 1, Very Unfavorable financial risk.
- Overall Score: 2, Moderate but lower comprehensive standing.
Which one is the best rated?
Based on the provided data, Palo Alto Networks holds a higher rating of B versus StoneCo’s C, with superior scores in discounted cash flow, ROE, ROA, and debt to equity, indicating stronger financial metrics overall. StoneCo’s scores are consistently lower across key indicators.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for both companies:
PANW Scores
- Altman Z-Score: 5.95, placing it in the safe zone, indicating low bankruptcy risk.
- Piotroski Score: 6, categorized as average financial strength.
STNE Scores
- Altman Z-Score: 1.02, in the distress zone, indicating high bankruptcy risk.
- Piotroski Score: 5, also categorized as average financial strength.
Which company has the best scores?
PANW shows a significantly higher Altman Z-Score, indicating stronger financial stability compared to STNE, which is in distress. Both have similar average Piotroski Scores, suggesting comparable financial strength by that measure.
Grades Comparison
The available grades for Palo Alto Networks, Inc. and StoneCo Ltd. from verifiable grading companies are as follows:
Palo Alto Networks, Inc. Grades
The table below shows recent grades from reputable financial institutions for Palo Alto Networks, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Neutral | 2026-01-13 |
| Piper Sandler | Maintain | Overweight | 2026-01-05 |
| Guggenheim | Upgrade | Neutral | 2026-01-05 |
| Morgan Stanley | Maintain | Overweight | 2025-12-18 |
| Goldman Sachs | Maintain | Buy | 2025-11-21 |
| HSBC | Downgrade | Reduce | 2025-11-21 |
| Needham | Maintain | Buy | 2025-11-20 |
| WestPark Capital | Maintain | Hold | 2025-11-20 |
| Bernstein | Maintain | Outperform | 2025-11-20 |
| DA Davidson | Maintain | Buy | 2025-11-20 |
Overall, Palo Alto Networks shows a mix of Buy and Hold ratings, with some recent upgrades and one downgrade, reflecting a generally positive but cautious outlook.
StoneCo Ltd. Grades
The table below presents recent grades from reputable financial firms for StoneCo Ltd.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Goldman Sachs | Maintain | Buy | 2025-10-14 |
| B of A Securities | Maintain | Buy | 2025-09-09 |
| UBS | Maintain | Buy | 2025-08-29 |
| JP Morgan | Maintain | Overweight | 2025-07-16 |
| Barclays | Maintain | Equal Weight | 2025-05-12 |
| Barclays | Maintain | Equal Weight | 2025-04-23 |
| Citigroup | Upgrade | Buy | 2025-04-22 |
| Barclays | Maintain | Equal Weight | 2025-03-21 |
| Morgan Stanley | Maintain | Underweight | 2025-03-21 |
| Goldman Sachs | Maintain | Buy | 2025-02-06 |
StoneCo Ltd. grades primarily indicate Buy and Equal Weight ratings, with one Underweight rating, suggesting a generally positive but somewhat more varied assessment.
Which company has the best grades?
Palo Alto Networks, Inc. has received more consistent Buy and Outperform ratings from multiple firms, while StoneCo Ltd. has a broader range including Equal Weight and Underweight grades. Investors may perceive Palo Alto Networks as having stronger analyst confidence, potentially influencing their portfolio allocation decisions.
Strengths and Weaknesses
Here is a comparison of key strengths and weaknesses for Palo Alto Networks, Inc. (PANW) and StoneCo Ltd. (STNE) based on the latest financial and operational data.
| Criterion | Palo Alto Networks, Inc. (PANW) | StoneCo Ltd. (STNE) |
|---|---|---|
| Diversification | Strong product and subscription mix with growing recurring revenues (Subscription $4.97B in 2025) | Focused on payment solutions, less diversified |
| Profitability | Positive net margin (12.3%), neutral ROIC (5.67%), but slightly unfavorable valuation metrics (PE 101.43) | Negative net margin (-11.89%), but high ROIC (22.41%) and favorable valuation (PB 1.27) |
| Innovation | Consistent innovation in cybersecurity with increasing ROIC trend (+224.5%) | Rapid ROIC growth (+371.2%) indicating strong operational improvements |
| Global presence | Established global cybersecurity footprint | Primarily focused on Brazil and Latin America markets |
| Market Share | Significant player in cybersecurity market | Growing fintech presence but facing competitive pressures |
Key takeaways: Palo Alto Networks shows strength in diversified recurring revenue and innovation but faces valuation challenges and slightly unfavorable capital efficiency. StoneCo demonstrates a robust competitive advantage with high ROIC growth despite current profitability challenges, driven by its fintech niche in emerging markets. Investors should weigh growth potential against profitability and market focus risks.
Risk Analysis
Below is a risk comparison table for Palo Alto Networks, Inc. (PANW) and StoneCo Ltd. (STNE) based on the most recent data from 2025 and 2024.
| Metric | Palo Alto Networks, Inc. (PANW) | StoneCo Ltd. (STNE) |
|---|---|---|
| Market Risk | Moderate (Beta 0.75, stable tech sector) | High (Beta 1.83, emerging market volatility) |
| Debt level | Low (Debt/Equity 0.04, favorable) | High (Debt/Equity 1.1, unfavorable) |
| Regulatory Risk | Moderate (US cybersecurity regulations) | High (Brazilian fintech regulatory complexity) |
| Operational Risk | Moderate (Tech infrastructure risks) | Moderate (Fintech platform risks) |
| Environmental Risk | Low (Tech sector, minimal direct impact) | Low (Financial services, limited exposure) |
| Geopolitical Risk | Moderate (US global presence) | High (Brazilian market, geopolitical instability) |
In summary, StoneCo faces higher market, regulatory, debt, and geopolitical risks due to its emerging market exposure and financial leverage. Palo Alto Networks has manageable risks with strong financial health, but valuation concerns remain significant. Investors should weigh StoneCo’s high-risk profile against its growth potential, while Palo Alto offers stability but at a premium price.
Which Stock to Choose?
Palo Alto Networks, Inc. (PANW) shows favorable income growth with a 116.67% revenue increase over five years and a strong 12.3% net margin. Financial ratios are slightly favorable overall, with low debt levels and solid interest coverage, supported by a very favorable B rating. However, its price ratios appear stretched, and the company is shedding value despite growing profitability.
StoneCo Ltd. (STNE) exhibits mixed financial health with favorable revenue growth of 302.29% over five years but negative net margins and profitability. Ratios are slightly favorable, highlighting good capital efficiency but higher leverage and moderate financial risk. STNE holds a very favorable C rating but faces distress signals from its Altman Z-Score and weaker profitability metrics.
For investors prioritizing durable competitive advantage and value creation, STNE’s very favorable moat and improving ROIC might appear attractive despite current profitability challenges. Conversely, PANW’s strong income statement and ratings suggest it could appeal to growth-oriented investors seeking expanding revenue and stable financial footing. The choice could depend on the tolerance for risk and preference for growth versus value dynamics.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Palo Alto Networks, Inc. and StoneCo Ltd. to enhance your investment decisions:
