Buy Palantir Stock

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Buy Palantir Stock

Should You Buy Palantir Stock At A Discount?

Palantir Technologies received a rating upgrade and is now labeled as BUY. It is worth mentioning that the stock is trading way lower than its 52-week high, made at $207.52.

So, is it the right time to buy Palantir Technologies stock at a discount, or is it better to wait? The answer to this lies in taking a closer look at Palantir.

Palantir's Balance Sheet Is Strong

The data shows that Palantir GAAP net income was around $871 million in the last quarter. Its profit margin was 53%, and the EPS was $0.34. As for the adjusted free cash flow, it came to nearly $925 million. The balance sheet shows that Palantir has around $8 billion in cash.

The P/E ratio of Palantir is 145, and its forward P/E is 86. So, even though the earnings have improved and stock prices have gone down, the valuation of Palantir is still very high.

No matter how we look at it, there's no way to justify a valuation this high. But we must also understand that Palantir is not your average company. The company has demonstrated that it can achieve a high growth rate for extended periods of time.

Also, Palantir's customer base is no longer just limited to the US government. The company now also has other clients, and this diversification is a good thing for the company.

So, if Palantir can manage to grow its earnings, then the valuation will eventually fall to more reasonable levels. But for now, it is better to adopt a wait-and-see approach.

With all things considered, the safe approach is to not buy the Palantir stock. But once the P/E ratio becomes more reasonable, then an entry can be considered.

For those who are willing to take the risk, an entry at the current levels can definitely be considered. There are a lot of stocks that continue to rise despite the unreasonable valuations. And the same thing can happen in the case of Palantir stock.

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