Palantir Technologies Inc. PLTR will report its third-quarter 2024 results on Nov 4, after the bell.
The Zacks Consensus Estimate for earnings in the to-be-reported stands at 9 cents, indicating 28.6% growth from the year-ago reported quarter. The consensus estimate for total revenues stands at $705.1 million, indicating 26.3% year-over-year growth. There has been no change in analyst estimates or revisions lately.
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The company has an impressive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters and matched thrice, with an earnings surprise of 4.2%, on average.
Palantir Technologies Inc. Price and EPS Surprise
Palantir Technologies Inc. price-eps-surprise | Palantir Technologies Inc. Quote
PLTR’s Lesser Chance of Q3 Earnings Beat
Our proven model doesn’t conclusively predict an earnings beat for PLTR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PLTR has an Earnings ESP of -1.22% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
PLTR’s All Round Healthy Business Should be the Driver in Q3
We expect a significant year-over-year improvement in the company’s top line in the to-be-reported quarter, driven by healthy business from existing as well as new customers, strengthening both the Government and Commercial segments.
The consensus estimate for Government revenues is pegged at $377.3 million, indicating 22.7% year-over-year growth. The consensus mark for Commercial revenues is pegged at $329.7 million, indicating 31.6% year-over-year growth.
PLTR Stock Looking Pricey
Palantir shares have surged a whopping 154.4% year to date. This performance has significantly outpaced the 28.1% rise of its industry and the 22.5% increase of the Zacks S&P 500 composite. Interest in this prominent AI-focused stock remains strong as investors seek opportunities to capitalize on the trend. Similarly, other noteworthy AI stocks have experienced significant gains, reflecting the overall positive sentiment in the market. NVIDIA NVDA has gained 181.4% and SoundHound AI SOUN has rallied 157.1% year to date.
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At this moment, it is worth noting that at its current valuation, Palantir is looking pricey. Based on training 12-month EV-to-EBITDA, PLTR is currently trading at 387.07X, way above the industry’s 50.29X. If we look at the forward 12-month Price/Earnings ratio, the company’s shares are currently trading at 103.67X forward earnings, well above the industry’s 39.9X.
Investment Considerations
Palantir’s AI strategy is comprehensive. It combines its proprietary Foundry and Gotham platforms with a solid plan to promote AI adoption across the government and commercial sectors. The company’s expertise in AI-driven information warfare and cybersecurity supports its sustained growth amid evolving global security demands. In the government sector, Palantir is aligning its AI strategy with U.S. defense priorities. In the commercial space, Palantir’s AI Platform (AIP) boot camps — providing hands-on experience to over 1,000 companies — have proven instrumental in customer acquisition.
In the second quarter of 2024, Palantir’s government revenues grew 23% year over year, driven by strong demand for its AI-powered products. U.S. commercial revenues also surged 55%, fueled by the success of AI platforms. Additionally, the company reported an 88% year-over-year increase in operating income and a 1,200 basis points increase in adjusted operating margin, reflecting improved cost management and higher-margin government contracts.
Wait for the Right Time to Buy
Palantir’s latest guidance suggests a 3% sequential increase in revenues for the third quarter of 2024, indicating a potential slowdown in business growth in the latter half of the year. Nevertheless, the company’s agility in AI-led information warfare and cybersecurity continues to position it for sustained growth amidst evolving global security needs.
However, given the stock’s current high valuation based on EV-to-EBITDA and Price/Earnings ratios, it might be prudent for investors to wait for a potential market correction, especially when PLTR does not seem poised for an earnings beat. Palantir remains fundamentally strong, but a better entry point could emerge if the stock undergoes some price adjustment.
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