Palantir Technologies currently trades at $182.42 and has been a dream stock for shareholders. It’s returned 583% since September 2021, blowing past the S&P 500’s 69.5% gain. The company has also beaten the index over the past six months as its stock price is up 19.1% thanks to its solid quarterly results.
Is now still a good time to buy PLTR? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive on Palantir Technologies?
Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ:PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.
1. Billings Surge, Boosting Cash On Hand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Palantir Technologies’s billings punched in at $1.99 billion in Q2, and over the last four quarters, its year-on-year growth averaged 76.7%. This performance was fantastic, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth. 
2. Customer Acquisition Costs Are Recovered in Record Time
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Palantir Technologies is extremely efficient at acquiring new customers, and its CAC payback period checked in at 4.4 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Palantir Technologies more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Palantir Technologies has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the software sector, averaging an eye-popping 56.5% over the last year.
Final Judgment
These are just a few reasons why Palantir Technologies ranks near the top of our list, and with its shares outperforming the market lately, the stock trades at 42.8× forward price-to-sales (or $182.42 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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