Palantir Technologies Inc. (PLTR)

Conclusion

Palantir Technologies builds software platforms, including Gotham, Foundry, Apollo and its AI Platform, that help intelligence, defence and commercial organisations integrate data and act on it. At a price of 168.82 USD on 2026-11-10, the market capitalisation is 389.4 billion USD.

The verdict is overvalued. The price-to-earnings ratio is 106.1 and EV/EBITDA is 100.6, and the three-year-or-longer history is too short for a ten-year median on these two multiples. Price-to-sales is 53.4 against a ten-year median of 24.2, and price-to-book is 34.7 against 15.1. Price-to-free-cash-flow is 96.1 against a median of 95.2. The DCF gives 31.51 USD per share at a discount rate of 13.04%, and the fair value from historical multiples is 76.36 USD. The fair value band runs from 43.15 to 64.72 USD with a midpoint of 53.93 USD, a margin of safety of -68.1%. The reverse DCF implies revenue growth of 40.7% a year, against 32.6% delivered over five years.

The strongest supports are the net cash position (net debt to EBITDA of -2.74), the return on invested capital of 413.6% against a WACC of 13.04%, and the revenue compound growth of 32.6% over five years, with revenue rising in all seven comparable years. The weakest numbers are the price-to-sales premium of 121.1% over the median, the five-year share count growth of 21.2% a year, and stock-based compensation equal to 13.5% of revenue.

Financial health

Financial strength is green, supported by a current ratio of 7.10, a quick ratio of 6.92, net debt to EBITDA of -2.74 (a net cash position) and debt to equity of 0.02. Interest coverage is not available because the company does not report its interest expense. The Altman Z-score is 115.38, in the safe zone, although the Altman model was designed for manufacturers and Palantir is a software company. Insolvency risk is low, about 0.0% by the estimate of the Ohlson model over one to two years, with an O-score of -11.54 as of 2025-12-31. The balance sheet carries almost no debt, so the main financial risk lies elsewhere.

Earnings quality

Earnings quality is yellow: free cash flow conversion of 110.5% (trailing twelve months) and 316.8% (five-year average) and a negative accrual ratio of -0.07 support it, while the five-year share count growth of 21.2% a year weighs it down. Free cash flow after stock-based compensation is 3.07 billion USD. The Piotroski score is 7 of 8 evaluable criteria. The Beneish M-score is not available. The company beat earnings estimates in 7 of the last 8 quarters, with an average surprise of 17.7%. Estimates for the current year were revised up by 6.5% over 90 days, and for next year by 7.9%, with 46.1% expected growth in next year's earnings. Over the last 30 days, three current-year estimates went down and one went up.

Profitability

Profitability is green. The gross margin is 84.7% against a ten-year median of 78.3%, the operating margin is 45.6% against a median of -17.6%, and the net margin is 50.3% against a median of -26.7%. Operating margin stability is 1.47. Return on invested capital is 413.6% against a WACC of 13.04%, with a ROIC minus WACC value of 400.6%, and the five-year median ROIC is 204.9%. The DuPont split shows a net margin of 36.3%, asset turnover of 0.50 and an equity multiplier of 1.20 for 2025. Return on equity of 32.7% therefore comes from margins rather than leverage. Tax is almost nil, with a tax rate of 1.4%.

Growth

Growth is green. Revenue compound growth is 32.9% over three years and 32.6% over five years. Revenue grew in all seven comparable years. Free cash flow per share compounded at 109.5% over three years. Earnings per share growth is not available, and a ten-year revenue growth figure is not available.

Valuation

Valuation is red, with the single signal of the fair value gap, a margin of safety of -68.1%, pulling it down. Today's multiples sit well above their history: price-to-sales is 53.4 against a median of 24.2, a premium of 121.1%, and price-to-book is 34.7 against 15.1, a premium of 129.7%. Price-to-free-cash-flow of 96.1 is close to its median of 95.2, a premium of 0.9%. The DCF uses a 20% growth rate for the first stage, 2.5% terminal growth and a 13.04% discount rate, giving 31.51 USD per share. Almost half of its value, 47.0%, sits in the terminal value. The fair value is a rough estimate built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target. The reverse DCF implies 40.7% growth against 32.6% revenue growth over five years. The company pays no dividend.

Risks

The price-to-sales and price-to-book premiums are the main exposure: if growth slows toward the rate the market has yet to prove, the multiples have little support from the current cash flows. Share count growth of 21.2% a year means shareholders are diluted rather than bought back, and stock-based compensation of 13.5% of revenue adds to that cost. The DCF is sensitive to its terminal value, which carries 47.0% of the result. The cost of debt is assumed rather than observed, and the interest expense is not reported, so interest coverage is not available. The Beneish M-score is not available, and the analysis has no debt maturity schedule and no revenue split by segment. The beta of 1.61 signals that the share price is volatile relative to the market.