Capital Asset Pricing Model (CAPM)
Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Palo Alto Networks Inc. common stock.
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Palo Alto Networks Inc. pages available for free this week:
- Common-Size Income Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Return on Assets (ROA) since 2012
- Current Ratio since 2012
- Price to Earnings (P/E) since 2012
- Price to Operating Profit (P/OP) since 2012
- Analysis of Debt
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Rates of Return
Palo Alto Networks Inc., monthly rates of return
| Palo Alto Networks Inc. (PANW) | Standard & Poor’s 500 (S&P 500) | |||||
|---|---|---|---|---|---|---|
| t | Date | PricePANW,t1 | DividendPANW,t1 | RPANW,t2 | PriceS&P 500,t | RS&P 500,t3 |
| Aug 31, 2019 | ||||||
| 1. | Sep 30, 2019 | |||||
| 2. | Oct 31, 2019 | |||||
| 3. | Nov 30, 2019 | |||||
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| 70. | Jun 30, 2025 | |||||
| 71. | Jul 31, 2025 | |||||
| Average (R): | ||||||
| Standard deviation: | ||||||
| Palo Alto Networks Inc. (PANW) | Standard & Poor’s 500 (S&P 500) | |||||
|---|---|---|---|---|---|---|
| t | Date | PricePANW,t1 | DividendPANW,t1 | RPANW,t2 | PriceS&P 500,t | RS&P 500,t3 |
| Aug 31, 2019 | ||||||
| 1. | Sep 30, 2019 | |||||
| 2. | Oct 31, 2019 | |||||
| 3. | Nov 30, 2019 | |||||
| 4. | Dec 31, 2019 | |||||
| 5. | Jan 31, 2020 | |||||
| 6. | Feb 29, 2020 | |||||
| 7. | Mar 31, 2020 | |||||
| 8. | Apr 30, 2020 | |||||
| 9. | May 31, 2020 | |||||
| 10. | Jun 30, 2020 | |||||
| 11. | Jul 31, 2020 | |||||
| 12. | Aug 31, 2020 | |||||
| 13. | Sep 30, 2020 | |||||
| 14. | Oct 31, 2020 | |||||
| 15. | Nov 30, 2020 | |||||
| 16. | Dec 31, 2020 | |||||
| 17. | Jan 31, 2021 | |||||
| 18. | Feb 28, 2021 | |||||
| 19. | Mar 31, 2021 | |||||
| 20. | Apr 30, 2021 | |||||
| 21. | May 31, 2021 | |||||
| 22. | Jun 30, 2021 | |||||
| 23. | Jul 31, 2021 | |||||
| 24. | Aug 31, 2021 | |||||
| 25. | Sep 30, 2021 | |||||
| 26. | Oct 31, 2021 | |||||
| 27. | Nov 30, 2021 | |||||
| 28. | Dec 31, 2021 | |||||
| 29. | Jan 31, 2022 | |||||
| 30. | Feb 28, 2022 | |||||
| 31. | Mar 31, 2022 | |||||
| 32. | Apr 30, 2022 | |||||
| 33. | May 31, 2022 | |||||
| 34. | Jun 30, 2022 | |||||
| 35. | Jul 31, 2022 | |||||
| 36. | Aug 31, 2022 | |||||
| 37. | Sep 30, 2022 | |||||
| 38. | Oct 31, 2022 | |||||
| 39. | Nov 30, 2022 | |||||
| 40. | Dec 31, 2022 | |||||
| 41. | Jan 31, 2023 | |||||
| 42. | Feb 28, 2023 | |||||
| 43. | Mar 31, 2023 | |||||
| 44. | Apr 30, 2023 | |||||
| 45. | May 31, 2023 | |||||
| 46. | Jun 30, 2023 | |||||
| 47. | Jul 31, 2023 | |||||
| 48. | Aug 31, 2023 | |||||
| 49. | Sep 30, 2023 | |||||
| 50. | Oct 31, 2023 | |||||
| 51. | Nov 30, 2023 | |||||
| 52. | Dec 31, 2023 | |||||
| 53. | Jan 31, 2024 | |||||
| 54. | Feb 29, 2024 | |||||
| 55. | Mar 31, 2024 | |||||
| 56. | Apr 30, 2024 | |||||
| 57. | May 31, 2024 | |||||
| 58. | Jun 30, 2024 | |||||
| 59. | Jul 31, 2024 | |||||
| 60. | Aug 31, 2024 | |||||
| 61. | Sep 30, 2024 | |||||
| 62. | Oct 31, 2024 | |||||
| 63. | Nov 30, 2024 | |||||
| 64. | Dec 31, 2024 | |||||
| 65. | Jan 31, 2025 | |||||
| 66. | Feb 28, 2025 | |||||
| 67. | Mar 31, 2025 | |||||
| 68. | Apr 30, 2025 | |||||
| 69. | May 31, 2025 | |||||
| 70. | Jun 30, 2025 | |||||
| 71. | Jul 31, 2025 | |||||
| Average (R): | ||||||
| Standard deviation: | ||||||
Show all
1 Data in US$ per share of common stock, adjusted for splits and stock dividends.
2 Rate of return on common stock of PANW during period t
3 Rate of return on S&P 500 (the market portfolio proxy) during period t
Variance and Covariance
Palo Alto Networks Inc., calculation of variance and covariance of returns
| t | Date | RPANW,t | RS&P 500,t | (RPANW,t–RPANW)2 | (RS&P 500,t–RS&P 500)2 | (RPANW,t–RPANW)×(RS&P 500,t–RS&P 500) |
|---|---|---|---|---|---|---|
| 1. | Sep 30, 2019 | |||||
| 2. | Oct 31, 2019 | |||||
| 3. | Nov 30, 2019 | |||||
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| . | . | . | . | . | . | . |
| 70. | Jun 30, 2025 | |||||
| 71. | Jul 31, 2025 | |||||
| Total (Σ): | ||||||
| t | Date | RPANW,t | RS&P 500,t | (RPANW,t–RPANW)2 | (RS&P 500,t–RS&P 500)2 | (RPANW,t–RPANW)×(RS&P 500,t–RS&P 500) |
|---|---|---|---|---|---|---|
| 1. | Sep 30, 2019 | |||||
| 2. | Oct 31, 2019 | |||||
| 3. | Nov 30, 2019 | |||||
| 4. | Dec 31, 2019 | |||||
| 5. | Jan 31, 2020 | |||||
| 6. | Feb 29, 2020 | |||||
| 7. | Mar 31, 2020 | |||||
| 8. | Apr 30, 2020 | |||||
| 9. | May 31, 2020 | |||||
| 10. | Jun 30, 2020 | |||||
| 11. | Jul 31, 2020 | |||||
| 12. | Aug 31, 2020 | |||||
| 13. | Sep 30, 2020 | |||||
| 14. | Oct 31, 2020 | |||||
| 15. | Nov 30, 2020 | |||||
| 16. | Dec 31, 2020 | |||||
| 17. | Jan 31, 2021 | |||||
| 18. | Feb 28, 2021 | |||||
| 19. | Mar 31, 2021 | |||||
| 20. | Apr 30, 2021 | |||||
| 21. | May 31, 2021 | |||||
| 22. | Jun 30, 2021 | |||||
| 23. | Jul 31, 2021 | |||||
| 24. | Aug 31, 2021 | |||||
| 25. | Sep 30, 2021 | |||||
| 26. | Oct 31, 2021 | |||||
| 27. | Nov 30, 2021 | |||||
| 28. | Dec 31, 2021 | |||||
| 29. | Jan 31, 2022 | |||||
| 30. | Feb 28, 2022 | |||||
| 31. | Mar 31, 2022 | |||||
| 32. | Apr 30, 2022 | |||||
| 33. | May 31, 2022 | |||||
| 34. | Jun 30, 2022 | |||||
| 35. | Jul 31, 2022 | |||||
| 36. | Aug 31, 2022 | |||||
| 37. | Sep 30, 2022 | |||||
| 38. | Oct 31, 2022 | |||||
| 39. | Nov 30, 2022 | |||||
| 40. | Dec 31, 2022 | |||||
| 41. | Jan 31, 2023 | |||||
| 42. | Feb 28, 2023 | |||||
| 43. | Mar 31, 2023 | |||||
| 44. | Apr 30, 2023 | |||||
| 45. | May 31, 2023 | |||||
| 46. | Jun 30, 2023 | |||||
| 47. | Jul 31, 2023 | |||||
| 48. | Aug 31, 2023 | |||||
| 49. | Sep 30, 2023 | |||||
| 50. | Oct 31, 2023 | |||||
| 51. | Nov 30, 2023 | |||||
| 52. | Dec 31, 2023 | |||||
| 53. | Jan 31, 2024 | |||||
| 54. | Feb 29, 2024 | |||||
| 55. | Mar 31, 2024 | |||||
| 56. | Apr 30, 2024 | |||||
| 57. | May 31, 2024 | |||||
| 58. | Jun 30, 2024 | |||||
| 59. | Jul 31, 2024 | |||||
| 60. | Aug 31, 2024 | |||||
| 61. | Sep 30, 2024 | |||||
| 62. | Oct 31, 2024 | |||||
| 63. | Nov 30, 2024 | |||||
| 64. | Dec 31, 2024 | |||||
| 65. | Jan 31, 2025 | |||||
| 66. | Feb 28, 2025 | |||||
| 67. | Mar 31, 2025 | |||||
| 68. | Apr 30, 2025 | |||||
| 69. | May 31, 2025 | |||||
| 70. | Jun 30, 2025 | |||||
| 71. | Jul 31, 2025 | |||||
| Total (Σ): | ||||||
Show all
VariancePANW = Σ(RPANW,t–RPANW)2 ÷ (71 – 1)
= ÷ (71 – 1)
=
VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (71 – 1)
= ÷ (71 – 1)
=
CovariancePANW, S&P 500 = Σ(RPANW,t–RPANW)×(RS&P 500,t–RS&P 500) ÷ (71 – 1)
= ÷ (71 – 1)
=
Systematic Risk (β) Estimation
| VariancePANW | |
| VarianceS&P 500 | |
| CovariancePANW, S&P 500 | |
| Correlation coefficientPANW, S&P 5001 | |
| βPANW2 | |
| αPANW3 |
Calculations
1 Correlation coefficientPANW, S&P 500
= CovariancePANW, S&P 500 ÷ (Standard deviationPANW × Standard deviationS&P 500)
= ÷ ( × )
=
2 βPANW
= CovariancePANW, S&P 500 ÷ VarianceS&P 500
= ÷
=
3 αPANW
= AveragePANW – βPANW × AverageS&P 500
= – ×
=
Expected Rate of Return
| Assumptions | ||
| Rate of return on LT Treasury Composite1 | RF | |
| Expected rate of return on market portfolio2 | E(RM) | |
| Systematic risk (β) of Palo Alto Networks Inc. common stock | βPANW | |
| Expected rate of return on Palo Alto Networks Inc. common stock3 | E(RPANW) | |
1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).
3 E(RPANW) = RF + βPANW [E(RM) – RF]
= + [ – ]
=