With the increasing use of artificial intelligence (AI), Internet of Things (IoT) and cloud-based services across several industries, companies involved in big data are expected to generate solid growth. Though many of the big data stocks are retreating as part of the broader tech sell-off, the downtrend for these stocks may not continue for long.
The global big data and business analytics market is expected to grow at a 10.9% rate through 2027.
However, against even this encouraging backdrop, big data companies Palantir Technologies Inc. (PLTR), Datadog, Inc. (DDOG), and MongoDB, Inc. (MDB) appear to us to be significantly overvalued currently given their weak financials and growth prospects. So, we think it’s wise to avoid them.
Click here to check out our Software Industry Report for 2021
Palantir Technologies Inc. (PLTR)
PLTR builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. It serves the government and non-government sectors. It offers two principal software platforms: Palantir Gotham and Palantir Foundry.
On May 5, Celularity Inc. announced a multi-year strategic partnership with PLTR to leverage the unique combined strengths of PLTR’s Foundry platform with Celularity’s deep dataset to accelerate and advance cellular therapies. However, it’s too soon to understand what level of profits this collaboration will bring to the company.
For the first quarter ended March 31, PLTR’s operating loss came in at $114.01 million, compared to a $70.20 million loss in the fourth quarter of its fiscal year 2020. The company’s net loss came in at $123.50 million compared to $54.30 million in the prior-year period. Its loss per share also came in at $0.07 compared to $0.10 in the prior-year period.
In terms of forward Enterprise Value/Sales, PLTR’s 22.58x is 456.9% higher than the 4.05x industry average of 4.05x. In terms of forward P/S as well, the stock’s 23.85x is 488.3% higher than the industry 4.05x average.
PLTR’s revenue is expected to increase 29.7% year-over-year to $1.91 billion in its fiscal year 2022. However, for the quarter ending September 30, analysts expect PLTR’s EPS to come in at $0.03, which represents a 66.7% year-over-year decrease. The stock has lost 40.8% over the past three months to close yesterday’s trading session at $18.89.
PLTR’s poor prospects are apparent in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a D grade for Value, Stability and Sentiment. Click here to see the additional POWR ratings for PLTR (Momentum, Quality and Growth).
PLTR is ranked #11 of 12 stocks in the F-rated Software- SAAS industry.
Datadog, Inc. (DDOG)
In operation for more than a decade, DDOG provides a monitoring and analytics platform for developers and information technology (IT) operations teams, among others. Its SaaS platform integrates and automates infrastructure monitoring, application performance monitoring and log management. Also, its platform is employed across public cloud, private cloud, on-premises and multi-cloud hybrid environments.
Last month, the company completed the acquisition of Sqreen, which is a SaaS-based security platform that enables enterprises to detect, block, and respond to application-level attacks. However, even though the acquisition is expected to help improve DDOG’s APM functionality in the long-term, it might affect the company’s cash flow negatively.
For the first quarter, ended March 31, DDOG’s loss from operations came in at $12.83 million compared to an operating income of $3.80 million in the prior-year period. Its net loss came in at $13.10 million compared to $6.50 million in net income in the first quarter of its fiscal year 2020. DDOG’s $0.06 of non-GAAP EPS remained unchanged compared to the same period last year.
In terms of forward non-GAAP P/E, DDOG’s 497.64x is significantly higher than the 23.91x industry average. In terms of forward EV/Sales, the stock’s 25.82x is 536.8% higher than the 4.05x industry average.
Even though the company’s revenue is expected to increase 56.9% year-over-year to $212.43 million for the quarter ending June 30, its EPS is expected to decline 40% year-over-year to $0.03. The stock has lost 15.1% over the past month to close yesterday’s trading session at $76.84.
DDOG’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The stock also has a D grade for Stability, Growth, Value and Momentum. Click here to see DDOG’s ratings for Sentiment and Quality.
DDOG is ranked #46 of 60 stocks in the D-rated Software-Business industry.
MongoDB, Inc. (MDB)
MDB provides a general-purpose database platform that helps businesses transform their operations by harnessing the power of data. It provides MongoDB enterprise advances, which includes its proprietary database server, security, enterprise management capabilities, its graphical user interface, analytics integrations and technical support.
In February, MDB announced the launch of a global partnership with Tencent Holdings Limited’s (TCEHY) Tencent Cloud that allows consumers to easily adopt and use MongoDB-as-a-Service across TCEHY's global cloud infrastructure. However, it’s still uncertain if this will significantly increase MDB’s consumer base.
The company’s operating loss increased 45.2% year-over-year to $59.40 million for fiscal fourth quarter, ended January 31. Its net loss for the quarter came in at $75.80 million compared to $62.60 million in the prior-year period. The company’s loss per share also came in at $1.21 compared to $1.10 in the year-ago period.
In terms of forward EV/Sales, MDB’s 20.27x is significantly higher than the 4.05x industry average. In terms of forward P/S, the stock’s 20.14x is 396.7% higher than the 4.05x industry average.
Analysts expect MDB’s revenue to be $764.62 million in its fiscal year 2022, which represents a 29.5% year-over-year increase. However, its EPS is expected to decline 176.9% year-over-year for the about-to-be-reported quarter, ended April 30. Its EPS is also expected to remain negative in its fiscal years 2022 and 2023. The stock has lost 40.4% over the past three months to close yesterday’s trading session at $251.85.
MDB has an overall F rating, which translates to Strong Sell in our proprietary rating system. It has a D grade for Value, Momentum, Sentiment, Growth and Stability. Click here to access MDB’s rating for Quality as well.
MDB is ranked #112 of 125 stocks in the D-rated Software- Application industry.
PLTR shares were trading at $18.27 per share on Thursday afternoon, down $0.62 (-3.28%). Year-to-date, PLTR has declined -22.42%, versus a 10.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand.
The post Avoid These 3 Overvalued Big Data Stocks appeared first on StockNews.com