Think Palantir Stock Is Expensive? This Chart Might Change Your Mind

Core Viewpoint - Palantir has shown resilience in the stock market, with a year-to-date increase of 17%, despite a 27% pullback from its all-time high in February [1] Valuation Metrics - Palantir's stock is considered premium-priced, trading at 158 times this year's expected earnings and 55 times expected sales, indicating a bullish valuation that may appear expensive given potential macroeconomic headwinds [2] - Despite high price-to-earnings ratios, there are indicators that suggest the stock's valuation may be more reasonable [2] Financial Performance - In 2024, Palantir generated free cash flow (FCF) of $1.14 billion on revenue of$2.86 billion, equating to $0.40 in FCF for every$1 in sales, showcasing a strong margin [4] - Revenue increased by 29% last year, with management projecting a growth rate of 31% for the current year, indicating a consistent upward trend in revenue [5] Growth Potential - Palantir has established itself as a key provider of analytics tools for both commercial and government clients, positioning the company for continued strong growth [6] - The company's robust FCF margin is expected to help it navigate potential macroeconomic risks, making its valuation appear less unreasonable than traditional metrics suggest [6]