Shares of Palantir Technologies (PLTR) are up more than 11% Tuesday on the heels of an impressive second-quarter performance. The company shoved it to the naysayers with 27% growth in revenue amidst “relentless AI demand”.
Adjusted earnings per share came in just above analyst expectations at $0.09 compared to $0.08. Net income of $134 million was a massive improvement from this time last year when the company posted just $28 million.
Revenue of $678 million easily beat the consensus of $653 million. Taking a closer look at sales for the quarter, the company’s $307 million commercial revenue was narrowly ahead of the $306 million consensus, but up 33% year over year. Meanwhile, Palantir’s government business showed a 23% improvement with $371 million compared to the $349 million estimate.
According to Wedbush Securities analyst Daniel Ives, this was exactly the performance needed in what he considered to be a “prove it” quarter for the software and AI solutions provider.
CEO Alex Karp took the opportunity to essentially say, I told you so! Monday night in revealing the results he said that those on Wall Street who had questioned Palantir’s strategy would have to admit it was working at this point.
Still, only 39% of analysts have PLTR a buy after this performance. Most others continue to hold their ground and maintain their underperform ratings, like William Blair’s Louie DiPalma. DiPalma says that given how low the consensus numbers were, the results won’t change his mind.
Whether he’ll have to eat those words next quarter or not remains to be seen. Palantir itself is convinced that this trajectory will continue, with revenue guidance of $697 million to $701 million compared to the consensus estimate of $681 million.
Meanwhile, the full-year forecast rose as well to $2.742 billion to $2.750 billion, up from the previously issued range of $2.677 billion to $2.689 billion.
While the gains PLTR made Tuesday morning are promising, they’ll only wash away losses taken leading into the earnings update amidst a broader market sell-off. However, the stock is up 10% in the past 3 months and 55% through 2024 thus far.
So, is now a good time to buy PLTR? Not so fast. We’ve analyzed this opportunity through the VectorVest stock software and found 3 things you need to consider first.
PLTR Has Poor Upside Potential, Fair Safety, and Good Timing
VectorVest is a proprietary stock rating system that distills complex technical and fundamental data into 3 simple ratings, saving you time and stress while empowering you to win more trades.
These are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy.
You’re even given a clear buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. Here’s what you need to know about PLTR:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. This is a far superior indicator than the typical comparison of price to value alone. PLTR has a poor RV rating of 0.81.
- Fair Safety: The RS rating is a risk indicator computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 0.93 is fair of PLTR.
- Good Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s analyzed day over day, week over week, quarter over quarter, and year over year to paint the full picture for investors. The RT rating of 1.24 is good for PLTR.
The overall VST rating of 1.03 is considered fair for PLTR, but it’s not enough to earn the stock a buy in the VectorVest system. The stock is rated a HOLD for the time being.
However, we encourage you to take a closer look at this opportunity so that when the time is right, you can fully capitalize. Get a free stock analysis today and transform your strategy for the better!
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VectorVest advocates buying safe, undervalued stocks, rising in price. PLTR posted impressive second quarter results that proved the doubters wrong - at least, for now. Whether the demand trend continues or not remains to be seen. In the meantime, the stock has poor upside potential, fair safety, and good timing.
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