Palantir Stock Is Near Its Record. Here's the Price at Which I'd Buy It.
The AI software specialist trades at around 170 times earnings. How much would it need to fall before I'd buy?
Shares of Palantir Technologies (PLTR) hit a record high on October 9 at $209.05, but have since dropped. Currently, the stock is trading around $198, only about 5% below its all-time high. The company's rapid growth and strong financial performance make it an attractive investment. Palantir reported a 93% year-over-year increase in second-quarter revenue and earnings per share (EPS) that more than tripled from $0.13 to $0.41 compared to the previous year.
Net income climbed from $327 million to $1.06 billion, showcasing substantial growth. Over the past year, Palantir's EPS increased from $0.30 to $1.17, indicating a significant rise in profitability. The stock's current valuation of around 170 times earnings places it at a high price-to-earnings (P/E) ratio, making it a premium investment.
Applying a 120 times earnings multiple, which is consistent with Palantir's valuation during weak market sentiment earlier this year, suggests a fair value of around $140 per share. If Palantir's earnings continue to grow at this rate, the stock could reach $197, very close to its current trading price. However, if earnings stabilize or grow at a slower pace, the stock might be worth buying at $140 per share, representing a substantial discount to its current price.
Palantir's consistent performance in the software sector makes it a compelling option for investors seeking high-growth opportunities.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
