Palantir Technologies (NASDAQ:PLTR) Passes Key Growth Stock Screen

In the field of growth investing, strategies that methodically find companies with quickening business momentum are highly desired. One such approach is described in Louis Navellier’s The Little Book That Makes You Rich, which simplifies the search for leading growth stocks into eight specific rules. These rules center on earnings revisions, sales and profit increases, cash flow health, and high returns on equity, intending to find firms not only growing, but doing so at a quicker pace. A stock that now appears from a filter based on these ideas is Palantir Technologies Inc-A (NASDAQ:PLTR).

Match with the "Little Book" Rules

A filter set to Navellier’s eight rules serves as a strict test, and Palantir’s present fundamental picture displays a good match with several important parts of the strategy.

• Positive Earnings Revisions & Surprises: The strategy gives high weight to analyst opinion and a company’s record of regularly beating estimates. Palantir meets both points:

  • The average EPS estimate for the next quarter has increased by more than 20% in the last three months, a notable upward change that points to rising analyst belief.
  • The company has reported a positive earnings surprise in three of its last four quarterly statements, with an average beat of almost 15%. This history of surpassing estimates is a central part of the method, as it frequently leads analysts to raise future estimates, possibly pushing the stock price up.

• Strong and Quickening Growth: Navellier’s model looks for companies where growth is both high and speeding up. Palantir’s recent results show this trait plainly:

  • Sales Growth: Revenue increased 47.2% over the past year and a notable 62.8% quarter-over-quarter. This quickening in sales growth is a main sign the strategy seeks.
  • Earnings Growth and Speed: EPS growth is more marked, up 82.9% year-over-year and 110% quarter-over-quarter. Importantly, this present quarterly EPS growth rate is much higher than the rate from the same quarter a year ago (42.9%), showing positive earnings speed, another specific rule in the book.

• Growing Profitability and Good Cash Creation: Growth is most useful when it leads to better profitability and cash flow. Palantir shows health here too:

  • The company’s operating margin has grown by more than 58% in the past year, indicating it can increase sales without raising costs at the same rate.
  • Free cash flow, a main sign of financial soundness and independence, has risen by about 278% over the past year.

• High Return on Equity (ROE): The last rule requires a high return on equity, which calculates how well a company creates profits from shareholder money. Palantir’s ROE of 16.6% is viewed as good, doing better than most of its software industry competitors.

Fundamental Rating Summary

An examination of Palantir’s wider fundamental analysis on ChartMill gives background for these filtering outcomes. The stock receives an overall fundamental rating of 7 out of 10. This score comes from two leading parts: outstanding Growth (rating of 10/10) and very good Financial Health (8/10), along with a firm Profitability picture (7/10).

• The growth rating is backed by the strong historical and expected future growth rates in both revenue and earnings.
• The health rating gains from a very good balance sheet with no debt and high liquidity measures, although it is mentioned that share count has risen over time.
• The main warning, as is typical with high-growth software companies, is in Valuation (2/10). The stock sells at high earnings multiples, which the report states could be partly explained by its outstanding growth and profitability measures. You can view the complete, itemized analysis in the detailed fundamental analysis report for PLTR.

Final Point for Growth Investors

For investors using a strategy like the one in The Little Book That Makes You Rich, Palantir Technologies offers a notable example. The company shows the exact mix of quickening revenue, fast earnings growth, growing margins, and good cash flow creation that the method is built to find. While its high valuation requires thoughtful study and points to the need for timing and risk management, its fundamental business path matches well with the rules for finding "leading growth stocks."

The filter that found Palantir is active and can reveal other companies showing similar speed. To see the present list of stocks passing this strict growth test, you can check the active "Little Book" strategy filter.

Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The "Little Book" strategy is one of many investment approaches, and past results of a filtering method do not guarantee future outcomes. Investors should do their own complete research and think about their personal financial situation and risk comfort before making any investment choices.