Software company Palantir Technologies (PLTR) has fallen nearly 50% in the past year. However, the stock has made gains in the past month as a result of recent developments. But will it be able to maintain its profits? Let’s find out….
Palantir Technologies Inc. (PLTR) builds and deploys software platforms for the intelligence community in the United States to aid in counter-terrorism investigations and operations. The company’s software portfolio includes Palantir Gotham, Palantir Foundry and Apollo.
On July 28, 2022, PLTR announced it would expand its work with the US Army Research Laboratory to implement data and artificial intelligence/machine learning capabilities for users in combatant commands.
In addition, Guidehouse, a global provider of consulting services, announced its partnership with PLTR on June 28, 2022. However, it may take some time for these companies to realize substantial profits.
In the past month, PLTR gained 20.8% to close out the last trading session at $11.20. However, it has lost 38.5% in the past year and 49.6% in the past year. It is currently trading 73.9% above the 52-week low of $6.44 it reached on May 12, 2022.
Here’s what could affect PLTR’s performance in the short term:
Mixed financial administration
For the first quarter ended March 31, 2022, PLTR’s revenue was $446.36 million, up 30.8% year over year. Cash, cash equivalents and cash on hold, however, came in at $2.33 billion, down 4.7% year over year.
In addition, the adjusted operating margin came in at 26%, compared to 34% in the same period last year. Adjusted free cash flow also came in at $29.79 million, down 80.3% year over year. In addition, adjusted EPS came in at $0.02, a 50% year-over-year decline.
In terms of its forward EV/S, PLTR’s 10.45x is 253.2% higher than the industry average of 2.96x. The forward EV/EBITDA of 37.81x is 186% higher than the industry average of 13.22x. In addition, the forward P/S of 11.58x is 288.7% higher than the industry average of 2.98x.
Poor profit margins
PLTR’s negative 12-month EBITDA margin of 19.46% is significantly lower than the industry average of 12.82%. In addition, the negative net income margin of 30.25% at 12 months is also lower than the industry average of 4.37%.
In addition, the ROCE, ROTC and ROTA of PLTR with a 12-month lag of negative 23.89%, 8.60% and 15.01% are comparable to the industry averages of 6.88%, 4.16% and 2, respectively. 65%.
POWR ratings reflect bleak outlook
PLTR has an overall rating of D, which equates to Selling in our proprietary POWR ratings system. The POWR ratings are calculated by taking into account 118 different factors, with each factor being optimally weighted.
PLTR has a value of F, consistent with valuation multiples higher than those in the industry. The stock is rated D for stability, in sync with the 24-month beta of 1.99.
In the 24 stock Software – SAAS industry, PLTR ranks 19th. The industry is rated F.
Click here for the additional POWR ratings for PLTR (growth, momentum, sentiment and quality).
See all the top stocks in the Software – SAAS industry here.
PLTR’s recent expansionary policy has helped the company to post positive returns over the past month. However, it has lost nearly 50% in the past year and its poor profitability looks worrying. So I think PLTR is best avoided for now.
How does Palantir Technologies Inc. (PLTR) to its competitors?
While PLTR has an overall POWR rating of D, one might consider looking at its industry peers, Informatica Inc. (INFA), The Sage Group plc (SGPYY), and MiX Telematics Limited (TO BLEND), which have an overall B (Buy) rating.
PLTR shares traded at $11.25 a share Thursday morning, up $0.05 (+0.45%). Year-to-date, the PLTR is down -38.22%, compared to a -12.11% rise in the benchmark S&P 500 index over the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentary.
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