It may sound absurd, but a key reason Palantir’s (PLTR) stock is ripping higher by double digits post-earnings is that its valuation is being perceived as cheap, historically speaking.
AlphaSpace stat of the morning: 84.03 Palantir’s stock has never been cheap, given the company’s growth status
But the stock had tanked 30% on the year ahead of the company’s strong second quarter earnings report on Monday. That brought the forward price-to-earnings (P/E) ratio down to 84.03 times per Yahoo Finance AlphaSpace data, down from a four-quarter average of about 199 times. For perspective, though, the S&P 500 (^GSPC) trades at a forward P/E ratio of about 20 times.
The finer details Palantir stock surged 14% in early trading on Tuesday, with good reason. The company delivered a standout second quarter, highlighted by a decisive reacceleration in demand in the US Commercial segment, where revenue growth accelerated 16 points sequentially to 149% year over year. More importantly, forward indicators on the business were even stronger, as the US Commercial unit’s total contract value surged 153% year over year to a record $2.1 billion.