Should Palantir Stock Be in Your Portfolio Before Q4 Earnings?

Palantir Technologies Inc. PLTR will report its fourth-quarter 2025 results on Feb. 2, after the bell.

The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at 23 cents, indicating 64.3% growth from the year-ago reported quarter. The consensus estimate for total revenues stands at $1.35 billion, indicating 62.8% year-over-year growth. There have been no changes or revisions to analyst estimates lately.

The company has a strong history of earnings surprises. Earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and matched once, with an earnings surprise of 16.3%, on average.

PLTR’s Lesser Chance of Q4 Earnings Beat

Our proven model doesn’t conclusively predict an earnings beat for PLTR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

PLTR has an Earnings ESP of 0.00% and a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

PLTR’s All-Round Healthy Business Should be the Driver in Q4

We expect a significant year-over-year improvement in the company’s top line in the to-be-reported quarter, driven by healthy business from existing and new customers, strengthening both the Government and Commercial segments.

The consensus estimate for Government revenues is pegged at $707.24 million, indicating 55.4% year-over-year growth. The consensus mark for Commercial revenues is pegged at $646.25 million, indicating 73.5% year-over-year growth.

PLTR Stock Looking Pricey

Palantir shares have surged a whopping 94% over the past year, consolidated over the past six months, and declined 19% in the past three months. This performance is a clear indication of a pullback in the stock lately.

However, the pullback to date has still not brought the stock to a level where it cannot be called pricey. Based on training 12-month EV-to-EBITDA, PLTR is currently trading at 543X, way above the industry’s 11X. If we look at the forward 12-month Price/Earnings ratio, the company’s shares are currently trading at 147X forward earnings, well above the industry’s 32X.

Investment Considerations

Palantir has shown impressive growth momentum, backed by strong demand across both government and commercial sectors, along with consistent profitability improvements. However, the stock’s current valuation already reflects much of this optimism, leaving limited room for near-term upside. While its long-term prospects in artificial intelligence and data analytics remain compelling, short-term investors may prefer to wait for a potential pullback before adding positions. Given the combination of strong fundamentals and stretched valuation, a “Hold” stance appears prudent ahead of the fourth-quarter earnings report, with a focus on monitoring future contract wins and margin trends.

As PLTR’s valuation stays high, Lockheed Martin LMT and RTX Corporation RTX offer more grounded defense exposure. Lockheed Martin, with its massive defense contracts, provides steady cash flow and less volatility than PLTR. Its forward 12-month price-to-earnings ratio is 20X, and trailing 12-month EV-to-EBITDA is below 15X. Lockheed Martin continues to benefit from global rearmament while trading at modest earnings multiples.

Similarly, RTX shines through missile systems. RTX’s defense backlog, like LMT's, underscores its stability. Its forward 12-month price-to-earnings ratio is below 30X, and trailing 12-month EV-to-EBITDA is just below 20X.

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This article originally published on Zacks Investment Research (zacks.com).

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