This Cybersecurity Growth Stock Is Up 40% in 2026, But It's Still a Bargain Compared to CrowdStrike and Palo Alto Networks

Tenable (NASDAQ: TENB) is a cybersecurity company that specializes in exposure management, a proactive form of enterprise protection that identifies vulnerabilities in corporate networks before attackers can exploit them. Hackers are currently using artificial intelligence (AI) to find these weaknesses faster than ever before, so demand for exposure management is surging.

As a result, Tenable stock has soared by over 40% this year. But it has a market capitalization of just $3.6 billion, so it's still worth a fraction of cybersecurity giants CrowdStrike and Palo Alto Networks, which have a combined market cap of over $450 billion.

Moreover, Tenable stock looks like a bargain compared to its peers based on one widely used valuation metric, which could open the door to significant long-term upside.

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Exposure management is entering a new era

Tenable is the owner of Nessus, which is the cybersecurity industry's most accurate and most widely deployed tool for identifying vulnerabilities. It constantly scans devices, operating systems, and networks for weak spots, so they can be patched before they are exploited. However, Nessus alone is no longer enough, so it has become an onramp to Tenable's growing portfolio of more advanced products.

The company built a comprehensive exposure management platform called Tenable One, which is designed to fulfill every possible requirement enterprises might have. It's powered by an AI engine called Hexa AI, which learns how different corporate assets interact so that it's equipped to flag vulnerabilities. Moreover, it autonomously runs scans to ensure an appropriate security posture is maintained, and it even coordinates specialized AI agents that can implement fixes when necessary.

Tenable One also features a specific tool to protect enterprises when their employees are deploying AI software. It's called AI Exposure, and it constantly monitors how AI applications are being used and what data is at risk, so it can quickly uncover vulnerabilities. It can also identify new, sophisticated tactics like prompt injection, which is when hackers instruct internal AI applications to hand over sensitive data.

During the second quarter, Tenable One accounted for half of Tenable's new sales, which suggests customers are leaving individual products behind and opting for the comprehensive all-in-one platform solution instead.

Modest revenue growth, but improving profits

Tenable generated $268.5 million in revenue during Q2, topping management's forecasted range of $263 million to $266 million. The result represented fairly modest growth of just 8.6% from the same quarter last year, and that's partly because the company is carefully managing costs to improve its bottom line.

Tenable had $195.8 million in total operating expenses during Q2, down from $200.3 million in the year-ago period. There were cost cuts across the board, including in growth-oriented areas like marketing, which helped the company eke out a net profit of $3.8 million. That was a massive improvement from its $14.7 million loss in the same quarter last year.

On an adjusted (non-GAAP) basis, which excludes one-off and non-cash expenses like stock-based compensation, Tenable's profits soared by 40% to $57.9 million. As the company gradually becomes more profitable, it will have the flexibility to invest more aggressively in areas like marketing, which could lead to a reacceleration in its revenue growth in the future.

One of the cheapest cybersecurity stocks money can buy

The price-to-sales (P/S) valuation metric divides a company's market capitalization by its trailing 12-month revenue. Tenable's P/S ratio is currently just 3.7, which is a steep discount to its average of 7.1 since going public in 2018. Moreover, Tenable is substantially cheaper than Palo Alto and CrowdStrike, which have P/S ratios of 22.9 and 38.1, respectively.

CRWD PS Ratio data by YCharts.

CrowdStrike's annual recurring revenue grew by 24% to $5.5 billion during its most recent quarter. Since the company is bringing in more money and growing at a faster pace compared to Tenable, it deserves a higher valuation -- but I think a tenfold premium is a bridge too far.

I'm not suggesting Tenable will ever trade at a similar P/S ratio to CrowdStrike, but its valuation does leave room for upside. For example, its stock would have to soar by 92% just to bring its P/S ratio in line with its long-term average of 7.1, which might be a good medium-term target for investors.

This stock could deliver far more upside in the long run as AI becomes a bigger security factor for businesses all over the world.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.