In-Depth Analysis: Palantir Technologies Versus Competitors In Software Industry

In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Palantir Technologies (NASDAQ:PLTR) in relation to its major competitors in the Software industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.

Palantir Technologies Background

Palantir is an analytical software company that focuses on leveraging data to create efficiencies in its clients' organizations. The firm serves commercial and government clients via its Foundry and Gotham platforms, respectively. Palantir works only with entities in Western-allied nations and reserves the right not to work with anyone that is antithetical to Western values. The Denver-based company was founded in 2003 and went public in 2020.

Company	P/E	P/B	P/S	ROE	EBITDA (in billions)	Gross Profit (in billions)	Revenue Growth
Palantir Technologies Inc	447.24	70.15	126.06	7.6%	$0.4	$0.97	62.79%
SAP SE	34.75	5.70	6.76	4.78%	$3.38	$6.67	7.15%
Salesforce Inc	35.33	4.13	6.33	3.44%	$3.3	$8.0	8.63%
AppLovin Corp	86.51	168.21	39.96	63.27%	$1.11	$1.23	68.23%
Intuit Inc	46.37	9.72	9.82	2.29%	$0.83	$3.0	18.34%
Adobe Inc	21.41	12.88	6.42	15.87%	$2.46	$5.35	3.44%
Synopsys Inc	59.63	3.25	11.30	1.6%	$0.45	$1.36	29.61%
Cadence Design Systems Inc	81.85	16.63	16.67	5.63%	$0.48	$1.16	10.15%
Autodesk Inc	58.34	22.02	9.40	12.23%	$0.53	$1.69	18.03%
Workday Inc	91.98	6.46	6.37	2.79%	$0.45	$1.84	12.59%
Datadog Inc	457.55	14.46	15.99	1.02%	$0.05	$0.71	28.35%
Roper Technologies Inc	30.94	2.42	6.30	2.01%	$0.82	$1.4	14.33%
Strategy Inc	6.75	0.90	98.09	5.3%	$3.89	$0.09	10.87%
Zoom Communications Inc	17.51	2.87	5.82	6.72%	$0.34	$0.96	4.44%
PTC Inc	29.45	5.59	7.90	9.48%	$0.48	$0.78	42.65%
Tyler Technologies Inc	64.67	5.55	8.87	2.33%	$0.15	$0.28	9.67%
Guidewire Software Inc	195.68	11.50	14.03	2.09%	$0.03	$0.21	26.53%
Docusign Inc	49.25	7.12	4.70	4.22%	$0.13	$0.65	8.42%
Average	80.47	17.61	16.16	8.53%	$1.11	$2.08	18.91%

Through a thorough examination of Palantir Technologies, we can discern the following trends:

• At 447.24, the stock's Price to Earnings ratio significantly exceeds the industry average by 5.56x, suggesting a premium valuation relative to industry peers.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 70.15 which exceeds the industry average by 3.98x.

• The Price to Sales ratio of 126.06, which is 7.8x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The Return on Equity (ROE) of 7.6% is 0.93% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $400 Million is 0.36x below the industry average, suggesting potential lower profitability or financial challenges.

• Compared to its industry, the company has lower gross profit of $970 Million, which indicates 0.47x below the industry average, potentially indicating lower revenue after accounting for production costs.

• The company is experiencing remarkable revenue growth, with a rate of 62.79%, outperforming the industry average of 18.91%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When examining Palantir Technologies in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

• In terms of the debt-to-equity ratio, Palantir Technologies has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.04.

Key Takeaways

For Palantir Technologies, the PE, PB, and PS ratios are all high compared to industry peers, indicating potentially overvalued stock. The low ROE, EBITDA, and gross profit suggest lower profitability and operational efficiency compared to industry peers. However, the high revenue growth rate may indicate strong potential for future growth and market expansion within the Software industry.

This article was generated by Benzinga's automated content engine and reviewed by an editor.