"Such valuations are almost unheard of when you discount smaller companies. In the same vein, expanding the earnings multiple from here is going to be an uphill battle. Palantir managed to fight its way upwards by posting one stellar earnings beat after another. In Q2 2024, it beat revenue estimates by 3.99%, with a 3.17% beat the next quarter, and a stellar 6.65% beat to finish off the year."
"Palantir stock is looked at as exceedingly expensive, which it is. But investors may be looking at the wrong metric. The price-earnings ratio of over 607 times (as of this writing) can look very scary. When you move past that and look at the free cash flow instead, you're actually paying ~254 times trailing free cash flow and ~216 times forward 2025 FCF (higher end of guidance)."
Palantir stock surged to high publicity earlier this year but has slowed recently despite rising 17.2% in the past month and remaining over 2% below August levels. The company has repeatedly beaten revenue and EPS estimates: Q2 2024 +3.99%, next quarter +3.17%, year-end +6.65%, start of 2025 +2.44%, and Q2 2025 +6.79%, with EPS outperformance in double digits. Valuation appears extreme on a P/E basis (over 607x). On free cash flow metrics the stock trades around ~254 times trailing FCF and ~216 times forward 2025 FCF.
Read at 24/7 Wall St.
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