This Software Stock Just Produced a Rule of 40 Score Nearly as High as Palantir's, and Its Valuation Is Much More Attractive
Despite rapid growth, shares of this AI-fueled software company are cheap.
Overview
Palantir Technologies (NASDAQ: PLTR) CEO Alex Karp is fond of highlighting the company's Rule of 40 score. The Rule of 40 states that a healthy software company's year-over-year revenue growth percentage plus its operating margin must exceed 40. Palantir blew that benchmark away last quarter, producing a Rule of 40 score of 155.
Another software company is quietly producing a triple-digit Rule of 40 score as well. But while the market is rewarding Palantir with earnings and sales multiples far in excess of those of practically any other company of its size, the valuation for this other fast-growing software stock is much more tame. In fact, its forward price-to-earnings (P/E) sits below 19, less than the overall S&P 500's.
Details
Here's why AppLovin (NASDAQ: APP) deserves a closer look.
Source
Originally published at www.fool.com.