Shares of leading software platform Palantir Technologies (PLTR) have recently fallen after its first quarter earnings report was released. However, over the last five days, stocks have risen slightly, thanks to new government contracts signed by the company. Given its negative profit margins and rich valuation, will the stock be able to keep this trajectory up in the short term? Read on to find out.
Palantir Technologies Inc. (PLTR) develops software platforms for US intelligence agencies. Its software services are designed to assist in counter-terrorism investigations and operations. The company’s popular software platforms are Palantir Gotham, Apollo and Palantir Foundry. However, PLTR has an ISS Governance QualityScore of 10, which indicates a high risk of governance.
PLTR shares have fallen about 55% to date and 34% in the last month. PLTR’s latest quarterly results combined with bearish market sentiment have caused stocks to plummet during this period. However, the stock has recovered over the past five days, thanks to new government contracts.
Here’s what could shape PLTR’s performance in the short term:
PLTR’s total revenue rose 31% year-over-year to $ 446 million in the first quarter of fiscal 2022 ended March 31. This can be attributed to a 136% increase in U.S. trade revenue and a 16% improvement in government revenue.
However, the company’s operating loss amounted to $ 39.44 million, while the EBT loss was $ 99.36 million. The net loss was $ 101.38 million, which translates to a loss of $ 0.05 per share. Operating cash flow decreased 69.6% year-over-year to $ 35.48 million.
History of mixed growth
PLTR revenues for the next 12 months increased by 36.7% year-on-year. The company’s leveraged free cash flow in the following 12 months improved by 79% year-on-year, while its total assets in the following 12 months increased by 30.9% over the same period last year.
However, the subsequent 12-month EBITDA of PLTR decreased by 73.4% year-on-year. In addition, its BPA for the next 12 months fell by 73.8% over the same period last year.
With regard to non-GAAP forward P / E, PLTR is currently trading at 43.88x, 152.8% higher than the industry average of 17.36x. Its EV / EBITDA multiple at 20.75 is 82.4% higher than the industry average of 11.38.
In addition, PLTR currently trades 7.55 times its forward sales, 190% more than the industry average of 2.60. Their price / cash flow and price / book ratios of 37.24 and 5.57 are compared to the industry averages of 6.18 and 3.71, respectively. In addition, the sales PLV / EV multiple of 5.77 is 120.3% higher than the industry average of 2.62.
Consensus rating and price targeting indicate potential upside
Of the 10 Wall Street analysts who rated PLTR, two rated Buy, while five rated Hold and three rated Sell. The 12-month average target price of $ 11.28 indicates a 53.7% upside potential from yesterday’s closing price of $ 7.34. Price targets range from a minimum of $ 6.00 to a maximum of $ 16.00.
POWR ratings reflect uncertainty
PLTR has an overall rating of C, which translates to Neutral on our property POWR ratings system. POWR scores are calculated taking into account 118 different factors, with each factor weighted to an optimal degree.
PLTR has a C rating for Momentum and Quality. The stock is currently trading slightly below its 50-day moving average of $ 11.75, which justifies the Momentum rating. In addition, the gross profit margin for the next 12 months of PLTR of 78.16% is 61% higher than the industry average of 48.55%. However, the company’s negative net income margin and ROE justify the degree of quality.
Of the 26 actions in the F classification Software – SAAS industry, PLTR ranks 16th.
Beyond what I said above, check out PLTR scores for sentiment, stability, value, and growth. here.
With a growing need for cybersecurity and national intelligence investigations amid growing geopolitical tensions between Russia and the West, PLTR is expected to see strong revenue growth in the coming quarters. However, investors should wait until PLTR’s profit margins improve before investing in stocks.
How does Palantir Technologies (PLTR) compare to its peers?
While PLTR has a C rating on our proprietary rating system, you may want to consider looking at your industry peers, MiX Telematics Ltd. (MIXED), The Sage Group plc (SGPYY), and Descartes Systems Group Inc. (DSGX), which have a B rating (Purchase).
PLTR shares were trading at $ 8.17 per share on Friday morning, up $ 0.83 (+ 11.31%). To date, the PLTR has decreased by -55.13%, compared to an increase of -15.28% in the S&P 500 benchmark during the same period.
About the author: Aditi Ganguly
Aditi is an experienced content developer and financial writer passionate about helping investors understand what to do and not to invest. He has a strong interest in the stock market and has a fundamental approach to analyzing stocks.
The mail Should I buy the dip at Palantir? appeared first StockNews.com