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paler is a polarizing stock on one hand we have analysts calling this sitting in The Sweet Spot given the large anticipated Federal AI spending in fact Dan Ives a very well-known analyst talks about how this company over the next year should be sitting somewhere in the $90 Mark and does believe it will continue to outperform in fact whil he does accept that the valuation is expensive today he believes in the coming years it will be a sort of Oracle or Salesforce type of company he also believes with the Trump Administration there will be a lot of benefits in fact a a tidal wave of federal spending leading to very impressive Returns on Palante in the future as well as in the shorter term then on the flip side we have analyst here at Jeff calling this company a $28 stock and whilst they do acknowledge the incredible 2024 this company has had they do believe it will underperform this year and no surprises what they do site this in relation to but they see this company in terms of the valuation at incredibly high levels and they see a lot of factors that are going to be changing in terms of the interest rates they believe the AI hype will start to slow down and The Insider selling that we have seen relentlessly and will show you later on are all negative factors for paler and in turn will lead this company to underperform we then can move to Morning Star who kind of agree as well when they are considering whether this company is a buy or a sell they actually have a lower valuation for this company right now and they see it sitting around $21 at the fair price and actually they also believe that this company doesn't have a moat they have it as narrow as opposed to wide and they see a lot of uncertainty over palente teer so we have lots of different views over this company but no one can put aside the fact it has had an incredible last 12 months up 372 now we do notice right now trading at the upper end of the 52 week range and we do actually get for the first time in quite a while a sell rating and that is from seeki alpha now yes Wall Street do give this company hold but Quant interestingly even with their hold rating it isn't far from the 3.5 to flip this into a buy so you could say they are sitting right now on the fence if we were to look at just over the last few months in the technology sector palente here has been outperforming even the likes of Microsoft and other companies up around 84% the question does though is this a bubble are we going to see Palante tier come down very sharply or are they going to continue to steamroll ahead and we're going to get to our own valuation shortly but what we can see is they are due to report after the market close on the 3rd of February and if we just see what the market is anticipating well in fact quarter 4 which is coming up they anticipate a 40% increase to the EPS year on-ear actually they're anticipating double digit growth for the subsequent three quarters as well and we like the fact that over the last four quarters at a bare minimum they have been in line with management targets now for this full year of the 48 Cent EPS Target this will lower their forward P to 165 but this still shows you it is trading at ridiculous valuations when we look at it there will be no surprises here but it does currently sit above the sector median at 26.4 meaning if you're buying this company in relation to comparatives you are paying a 688 premium granted you could argue it does deserve it very impressive in terms of the growth profitability and other factors which we do agree with and will come to show you but also look at this it does trade higher than their 5year average in fact sitting now around 69% the question remains whether this is caus for concern for investors whether they should continue to hold or perhaps consider trimming their position now we also like the fact that the growth does sit add an A but again we're only talking about 25% over the last year that is above the sector comparative 4.4 but it does come below their 5year average and the same to be said forward looking they anticipate 22% growth over the next 12 months the sector at 5.5 and their 5year average does come in higher so actually you could argue the growth is starting to slow down and that is also the same conclusion we get when we look at their earnings per share 28% anticipated over the next 3 to 5 years that is higher than the comparative of the sector at 15 but significantly lower than their 5year average of 47% now we can also show you the profitability which does look good in all fairness 81% on the gross margin above both the sector as well as their 5year average and when we get to the bottom line at 18% not only better than the sector at 3.7 but we can see Over The Last 5 Years they've actually been returning a loss which is very impressive nice to see and we will show you again that they have started to move in the right direction and we can also see they have generated quite a significant amount of cash from operations 1 billion over the last 12 months 94 million from the sector and also significant higher than their 5year average of 272 million now their performance has been very strong when we compare it to others in a similar sector similar size they are up 372 but you always need to remember that the past performance has no indication of how they'll perform in the future and we do also want to highlight in all fairness this company is growing up 30% in terms of their revenue from the latest quarter in comparison to the previous we also like the fact not only revenue is increasing not only the operating income is increasing but also they're improving on their margins which does show us a high quality company operating efficiencies as well as the sales number moving up in the right direction now for the full year one thing that we do quite like we will use this as part of our discounted cash flow model but they anticipate 1 billion of free cash flows for the full year and in terms of the revenue somewhere between 2.8 to 2.81 billion now for those interested in seeing this quarter as it will be very key to understand if they can be what the market expects but somewhere between 767 to 771 million now one area that really has propelled all of their increases is the fact that they are continuing to close a significant number of deals 36 of these deals were at least worth $5 million and 16 of these at least 10 million and it doesn't look like it is going to be stopping anytime soon as we have two of the largest defense companies here looking to join forces to group bids for Pentagon contracts and ultimately take a Big Slice of the 800 50 billion US defense budget which could actually increase with Donald Trump so lots of factors that are positive for this company it really does come down to the valuation and what we can see when looking at Insider ownership that sits at just under 133% but they have been selling quite a significant amount 2.5 billion over the last year now in terms of 2025 alone we have seen 36 Million worth of sales in the previous quarter we did get around 1.41 billion now we will show you here for essentially transparency but we do want to highlight we don't typically think of this as a barrier we have on the 7th of January as well as the 2nd in fact quite a number of insiders been selling around $37 million although we can see the largest one here was by Ryan Taylor on the 2nd of January again information is there if you want to use it in your own thesis and in terms of what the institutions are doing well actually they're very bullish 46% ownership and whil they have been selling around 1.8 8 billion worth of shares over the last year they've been buying a lot more 5.54 billion to be exact but again remember just because institutions are buying doesn't mean you should always always do your own due diligence now in terms of a quick run through of their underlining metrics free cash flow looking good in that yes it has been negative but now moving in the right direction expected to continue over the next 12 months sales growth also looking good but again the question must be asked is this Revenue starting to slow down 47 peak in 2020 17 in 2023 is the valuation right now correct and in terms of sales as always great to see this moving in the right direction we do have to point out they have been diluting your position as a shareholder over the last few years but perhaps if they can continue to outform the S&P maybe this isn't something to worry about roic pretty much confirming that they have made a loss majority of the last few years nice to see in the most recent year and expected in 2024 based on the training 12 month we will get another year of a bottom line profit Fair operating margin also showing us efficiencies pretty much from 2020 where it was negative quite substantially it has improved year on year now 14% on a trading 12 month and the free cash flow pretty much from 2021 looking very solid 40% on a trading 12 month we want to see at a bare minimum 5% and that is what they have shown over the last few net debt ebits are also very important Zero from 2020 zero anticipated over the next 12 months this just tells us that it won't even take Palante one day to pay off all of their debt n of cash on hand now before we do jump into our valuation we e dropped one every single Monday morning so a fresh copy coming tomorrow completely free highlighting ing o you can grab a copy of 46 undervalued socks for the month of January February copy coming next week as well as the upside That Wall Street themselves and anticipat right now now our intrinsic value does come to $59 today which is derived from the DCF model now we will first highlight for the full year of 2024 we have used the $1 billion that they have estimated in that investor presentation from the last earnings now average growth is negative skewed some years negative some years positive forward looking 35% with the discount rate we then get the intrinsic value that does come to 59 and that ultimately does actually say there's downside right now of 25% paler or any others but full transparency look at the 30% it does come to around $45 which is downside of 43 and at the 40% level it does come to around 7 $7 so pretty much at the current price so what this signals to us right now baked into the current value of around $79 it is anticipated to grow at 40% year on year in terms of the increase to the free cash flows if you believe it is going to be lower than that no matter 35 30 25 then right now this company does look to be overvalued if you believe it to be above 40% then right now it looks to be undervalued and if you see around the 40% point then it does look to be currently at the fair price as always is though we do take the 35% through because we like to apply a margin of safety where we start off with now if you believe that a buy $53 But ultimately what this tells us right now given the current price is above our intrinsic value that it is trading at a significant premium but for those that are interested at 10% a buy at $53 at 20% around 47 and at 25 around 45 what's interesting to note is that Wall Street believe over the next year on average the share price will hit $49 which is actually downside right now of 38% as always though do give us your thoughts in the below maybe this is one you're holding into earnings maybe you're considering to buy if there's a drop or for whatever reason it doesn't fit your overall portfolio thesis we also just want to flag here based on the current price and the current market cap for those that do see this as a$1 trillion company whether next year another 5 to 10 years then then the share price would sit somewhere around $439 again just food for four an interesting exercise we thought we would include and as always don't forget to give us your thoughts in the comments below new copy coming tomorrow e
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