Palantir Technologies Inc-A (NASDAQ:PLTR) Shows Strong Growth Metrics and Earnings Momentum

A methodical way to approach growth investing can help investors find companies with good possibilities for expansion. One such system comes from Louis Navellier's "The Little Book That Makes You Rich," which lists eight particular rules for choosing high-quality growth stocks. These standards center on earnings momentum, sales increases, profit improvement, and financial soundness to find companies showing speeding up business results. This organized filtering process recently found Palantir Technologies Inc-A (NASDAQ:PLTR) as matching the strategy's strict requirements.

Earnings Revisions and Surprises

The strategy focuses on positive earnings revisions as upward changes usually show analysts have gotten good signs of better business conditions. Palantir shows this through a 17.86% rise in next-quarter EPS estimates over the last three months. In the same way, the company has reported positive earnings surprises in three of the past four quarters, with an average beat of 11.44%. Steady outperformance makes analysts change future estimates upward, leading to higher expectations for future profit.

Growth Metrics

Speeding up growth is the center of Navellier's strategy, and Palantir shows outstanding expansion in important measures:

• Quarterly revenue growth of 62.79% year-over-year
• Annual revenue growth of 28.79%
• Quarterly EPS growth of 110% year-over-year
• Annual EPS growth of 82.86%

These numbers show the company is not just increasing quickly but seeing a quickening in its business speed, especially in profit.

Profitability and Cash Generation

Widening operating margins show better efficiency as sales increase, and Palantir's operating margin has grown by 40.54% over the past year. The company also shows very good cash flow creation with free cash flow growth of 355.23% each year. Good cash flow gives financial room to pay for internal growth projects without needing outside money.

Earnings Momentum and Returns

The strategy looks for companies where earnings growth is getting faster. Palantir's current quarterly EPS growth of 110% is much higher than the 42.86% growth recorded in the same quarter one year ago, showing good positive momentum. Also, the company gets a return on equity of 12.87%, passing the strategy's lowest limit of 10%, showing good use of shareholder money.

Fundamental Assessment

ChartMill's fundamental analysis report gives Palantir a total rating of 6 out of 10, noting the company's "excellent growth" profile even with a "quite expensive" valuation. The report points out very good health and growth ratings of 8 and 10 in order, with good performance across profit measures including profit margin (22.18%), operating margin (16.55%), and gross margin (80.03%) that place in the top group of software industry peers. The full fundamental analysis gives more detail on these measures.

Investment Considerations

While Palantir shows many traits looked for by growth investors, its current valuation numbers present points for thought. The company trades at large premiums to market averages with a P/E ratio of 323.72 and forward P/E of 239.18. Still, these valuations may be backed by expected earnings growth of 40.49% each year and revenue growth of 39.19% in coming years.

For investors looking for more companies matching the Little Book standards, the screening methodology can be used to find other possible opportunities with similar growth traits.

Disclaimer: This article presents objective analysis based on specified screening criteria and is not investment advice. Investors should conduct their own research and consider their individual financial circumstances before making investment decisions.