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Planet Labs Trades at a Premium: Should You Still Buy the Stock?
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Key Takeaways
Planet Labs trades at a high forward price-to-sales ratio, above industry and historical median levels.
PL's growth is driven by government contracts, AI analytics expansion, and a $900M backlog up 79% y/y.
High operating costs and mixed analyst outlook temper optimism despite projected strong revenue growth.
Planet Labs (PL - Free Report) stock is currently trading at a forward price-to-sales ratio of 22.15, above the Satellite and Communication industry’s 2.14, as well as above PL’s median of 3.65 over three years.
With a Value Score of F, PL stock does not appear to be a compelling value proposition at these levels.
Image Source: Zacks Investment Research
PL is relatively cheap compared to Rocket Lab (RKLB - Free Report) but expensive compared to BlackSky Technology (BKSY - Free Report) .
PL shares have gained 41.7% year to date, outperforming the industry. Planet Labs is a leading provider of Earth-imaging data and geospatial analytics, operating the largest fleet of Earth-observation satellites globally.
Image Source: Zacks Investment Research
Shares of Rocket Lab have lost 7.9% while those of BlackSky have rallied 34.2% year to date.
The Case for PL Stock
Planet Labs derives the majority of its revenues from a combination of fixed-price subscription agreements and usage-based contracts, delivering satellite imagery and analytics through its cloud-based platform to government agencies and large commercial clients. Its growth trajectory is increasingly supported by the maturation of its subscription model, strong demand from government customers and a strategic shift toward higher-value services and advanced analytics solutions.
In recent years, the company has prioritized securing large-scale government and defense contracts, which enhance revenue visibility and provide long-term stability. While this segment remains a primary growth driver, management continues to view the commercial market as a substantial long-term opportunity. Ongoing product innovation is expected to drive broader adoption among commercial users.
Notably, the expansion of AI-driven analytics—initially developed for government applications—is likely to unlock diverse commercial use cases, including supply chain monitoring, security and surveillance, operational efficiency, insurance risk assessment, financial analysis, energy management and agricultural optimization.
Over the past year, Planet Labs secured a €240 million agreement funded by Germany and a nine-figure deal with Sweden, launched 40 satellites, increased investments in AI, and announced a strategic partnership with Google to explore in-space computing capabilities—positioning the company for future growth.
The company’s expanding contract backlog further enhances revenue visibility. As of fiscal 2026, its backlog was $900 million, reflecting a 79% year-over-year increase and providing strong support for expected revenue acceleration. The year also marked Planet Labs’ first instance of achieving adjusted EBITDA profitability.
For fiscal 2027, management projects revenues between $415 million and $440 million, implying approximately 39% year-over-year growth at the midpoint. Gross margins are expected to range between 50% and 52%, with adjusted EBITDA projected between breakeven and $10 million.
However, profitability remains challenged by high operating costs associated with launching and maintaining satellite constellations. Significant investment in research and development, along with elevated sales, marketing, and administrative expenses, continues to weigh on margins.
Mixed Analyst Sentiment
The Zacks Consensus Estimate for fiscal 2027 and 2028 revenues indicates a 39.4% and 32.4% year-over-year increase. The consensus estimate for 2027 earnings indicates no change year over year, while that for 2028 indicates 267% year-over-year increase.
The consensus estimate for fiscal 2027 earnings has moved south in the past 30 days, while that for 2028 has moved north in the same time frame.
Image Source: Zacks Investment Research
The consensus estimate for 2026 earnings of RKLB has moved north in the past 30 days, while that for BKSY witnessed no movement in the same time frame.
Parting Thoughts on PL Shares
Planet Labs, a data-driven company focused on Earth-observation imagery and analytics, is poised to grow, given the rising global demand for commercial satellites.
However, current factors warrant caution. With the stock trading at a premium, returns on capital comparing unfavorably with the industry, looming near-term earnings pressure and mixed analyst sentiment, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock presently.
View the Zacks #1 Rank List
Image: Bigstock
Planet Labs Trades at a Premium: Should You Still Buy the Stock?
Key Takeaways
Planet Labs (PL - Free Report) stock is currently trading at a forward price-to-sales ratio of 22.15, above the Satellite and Communication industry’s 2.14, as well as above PL’s median of 3.65 over three years.
With a Value Score of F, PL stock does not appear to be a compelling value proposition at these levels.
Image Source: Zacks Investment Research
PL is relatively cheap compared to Rocket Lab (RKLB - Free Report) but expensive compared to BlackSky Technology (BKSY - Free Report) .
PL shares have gained 41.7% year to date, outperforming the industry. Planet Labs is a leading provider of Earth-imaging data and geospatial analytics, operating the largest fleet of Earth-observation satellites globally.
Image Source: Zacks Investment Research
Shares of Rocket Lab have lost 7.9% while those of BlackSky have rallied 34.2% year to date.
The Case for PL Stock
Planet Labs derives the majority of its revenues from a combination of fixed-price subscription agreements and usage-based contracts, delivering satellite imagery and analytics through its cloud-based platform to government agencies and large commercial clients. Its growth trajectory is increasingly supported by the maturation of its subscription model, strong demand from government customers and a strategic shift toward higher-value services and advanced analytics solutions.
In recent years, the company has prioritized securing large-scale government and defense contracts, which enhance revenue visibility and provide long-term stability. While this segment remains a primary growth driver, management continues to view the commercial market as a substantial long-term opportunity. Ongoing product innovation is expected to drive broader adoption among commercial users.
Notably, the expansion of AI-driven analytics—initially developed for government applications—is likely to unlock diverse commercial use cases, including supply chain monitoring, security and surveillance, operational efficiency, insurance risk assessment, financial analysis, energy management and agricultural optimization.
Over the past year, Planet Labs secured a €240 million agreement funded by Germany and a nine-figure deal with Sweden, launched 40 satellites, increased investments in AI, and announced a strategic partnership with Google to explore in-space computing capabilities—positioning the company for future growth.
The company’s expanding contract backlog further enhances revenue visibility. As of fiscal 2026, its backlog was $900 million, reflecting a 79% year-over-year increase and providing strong support for expected revenue acceleration. The year also marked Planet Labs’ first instance of achieving adjusted EBITDA profitability.
For fiscal 2027, management projects revenues between $415 million and $440 million, implying approximately 39% year-over-year growth at the midpoint. Gross margins are expected to range between 50% and 52%, with adjusted EBITDA projected between breakeven and $10 million.
However, profitability remains challenged by high operating costs associated with launching and maintaining satellite constellations. Significant investment in research and development, along with elevated sales, marketing, and administrative expenses, continues to weigh on margins.
Mixed Analyst Sentiment
The Zacks Consensus Estimate for fiscal 2027 and 2028 revenues indicates a 39.4% and 32.4% year-over-year increase. The consensus estimate for 2027 earnings indicates no change year over year, while that for 2028 indicates 267% year-over-year increase.
The consensus estimate for fiscal 2027 earnings has moved south in the past 30 days, while that for 2028 has moved north in the same time frame.
Image Source: Zacks Investment Research
The consensus estimate for 2026 earnings of RKLB has moved north in the past 30 days, while that for BKSY witnessed no movement in the same time frame.
Parting Thoughts on PL Shares
Planet Labs, a data-driven company focused on Earth-observation imagery and analytics, is poised to grow, given the rising global demand for commercial satellites.
However, current factors warrant caution. With the stock trading at a premium, returns on capital comparing unfavorably with the industry, looming near-term earnings pressure and mixed analyst sentiment, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock presently.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.