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Summary
- Palantir demonstrated a stellar revenue increase over the past five years, and recent quarterly financial statements suggest solid growth momentum is still in place.
- The latest earnings indicated a massive bullish signal because the company delivered its first-ever positive free cash flow quarter and my analysis suggests room for profitability improvement is huge.
- My valuation analysis suggests the stock is more than 20% undervalued.
Investment thesis
Palantir Technologies (NYSE:PLTR) is one of the hottest stocks year-to-date. Investing after a massive rally like PLTR demonstrated this year is risky, but my valuation analysis suggests the stock is significantly undervalued. The level of uncertainty regarding underlying assumptions is high, but even under very conservative growth expectations, the stock still looks undervalued. First quarter financial performance was an important milestone and a bullish signal that the company can generate solid free cash flow. My analysis suggests there is still huge room for further margin expansion in the upcoming quarters. The stock is a strong buy even after a 140% year-to-date rally, in my opinion.
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