Earnings Calendar (05May25)
The interesting earnings for the coming week involve Ford, Palantir, Rivian, Uber, Disney, Occidental and Coinbase.
Let us look at Palantir
The stock price has risen by over 432% from a year ago. Technical Analysis recommends a “Strong Buy” rating. The Analysts’ Sentiment remains “Neutral”. The price target is 87.05, which implies a downside of 29.96%.
The following Analysis is from Grok.
Revenue
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Growth Trend: Palantir's revenue has grown significantly, increasing from $595 million in 2018 to $2.866 billion in 2024. The 7-year compound annual growth rate (CAGR) for revenue is approximately 25%.
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Key Milestones: Revenue growth was strong, with increases of 24.7% in 2019, 47.2% in 2020, 41.1% in 2021, 23.6% in 2022, 16.7% in 2023, and 28.8% in 2024, reflecting consistent expansion driven by demand for its data analytics platforms.
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Competitive Advantage: Palantir’s robust revenue growth highlights its leadership in big data analytics, serving both government and commercial clients with its Foundry and Gotham platforms, positioning it well in the growing AI and data-driven decision-making market.
Operating Profit
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Growth Trend: Operating profit has improved significantly, moving from a loss of -$623 million in 2018 to a profit of $310 million in 2024. The operating margin turned positive, reaching 10.8% in 2024, up from -104.7% in 2018.
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Operating Margin: The operating margin has shown steady improvement, moving from deep losses (-104.7% in 2018, -77.6% in 2019) to positive territory (5.4% in 2023, 10.8% in 2024), reflecting better cost management and scaling efficiency.
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Competitive Advantage: Palantir’s transition to profitability demonstrates its ability to scale operations and reduce costs, a key strength in the competitive software industry, particularly in data analytics and AI.
Earnings Per Share (EPS)
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Growth Trend: EPS has improved from a loss of -$0.89 in 2018 to a profit of $0.19 in 2024. Growth rates show significant improvement, such as 77.5% in 2021, 33.3% in 2022, 150.0% in 2023, and 111.1% in 2024.
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Volatility: EPS has been volatile, reflecting Palantir’s early-stage growth and path to profitability, with a notable decline of -45.8% in 2020 before consistent improvement post-2020.
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Competitive Advantage: The shift to positive EPS and strong growth in recent years highlights Palantir’s ability to generate shareholder value as it matures, driven by its expanding customer base and product adoption.
Price-to-Earnings (P/E) Ratio
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Valuation: The P/E ratio is very high at 593.3, reflecting Palantir’s low earnings relative to its stock price and the market’s high expectations for future growth.
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10-Year Median Returns: return on assets (ROA) improved from -38.3% to 8.5%, return on equity (ROE) from -31.1% to 10.9%, and return on invested capital (ROIC) from -34.8% to 10.0%, showing a positive trend.
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Competitive Advantage: The high P/E ratio indicates strong market confidence in Palantir’s future growth, supported by its improving returns, though it also suggests potential overvaluation if growth expectations are not met.
Free Cash Flow (FCF)
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Growth Trend: The EV/FCF ratio is 235.7, indicating high valuation relative to free cash flow. However, Palantir’s operating profit and revenue growth suggest improving cash flow generation over time.
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Competitive Advantage: Palantir’s ability to generate cash flow (implied by its improving profitability) supports its growth initiatives, such as expanding its commercial business and investing in AI capabilities.
Other Key Metrics
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Gross Profit and Margin: Gross profit grew from $430 million in 2018 to $2.300 billion in 2024, with the gross margin improving from 72.2% to 80.2%. The high gross margin reflects Palantir’s software-driven business model with low variable costs.
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Return on Invested Capital (ROIC): ROIC improved from -34.8% in 2018 to 10.0% in 2024, showing a significant turnaround as the company became profitable.
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Competitive Advantage: The high gross margin and improving ROIC highlight Palantir’s scalable business model and efficient use of capital, key strengths in the software and data analytics sector.
Over the period from 2018 to 2024, Palantir has shown impressive growth, with revenue increasing significantly (approximately 25% CAGR) and operating profits turning positive ($310 million in 2024). EPS has shifted from a loss to a profit ($0.19 in 2024), with strong growth in recent years. The company does not pay dividends, focusing on reinvestment to fuel growth. The extremely high P/E ratio (593.3) reflects market optimism about Palantir’s future, though it also suggests potential overvaluation. Improving ROIC (10.0% in 2024) and a high gross margin (80.2%) underscore its competitive advantages, including its leadership in data analytics, strong software platforms (Foundry and Gotham), and growing adoption in both government and commercial sectors. Palantir’s focus on AI and data-driven solutions positions it well for future growth, though its high valuation requires sustained performance to justify investor expectations.
The EPS and revenue forecast are 0.13 and $864.11M, respectively. The strong revenue growth and improving profitability have seen the stock price with stellar 400% growth from a year ago. The stock has hit a recent high. I prefer to watch the stock and enter at a lower price point. I may take some profits off the table, too. The current P/E ratio implies that there is overvaluation.
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