🟢 SentinelOne Looks Like Palantir Before The Breakout (Double Rating Upgrade)
Published: July 18, 2025 – Seeking Alpha (PropNotes)
Analyst Rating: Strong Buy
🧾 Summary
This article presents SentinelOne (NYSE: S) as an undervalued, AI-native cybersecurity firm on the verge of a market re-rating — likened to Palantir (PLTR) before its commercial breakout. Despite prior doubts over profitability and stock-based compensation (SBC), SentinelOne now exhibits:
>23% YoY revenue growth for 10+ quarters.
$214M in free cash flow (25% margin), a sign of operating leverage kicking in.
Undemanding valuation at ~6× sales and 27× FCF.
A “sticky” product (Singularity) with deep client integration, similar to PLTR’s data stack.
Early GAAP profitability signs and forecasts of ~$0.50 EPS by 2028.
The article compares S’s current phase to PLTR’s 2023–2024 transformation and concludes that the market has not yet priced in S’s inflection. Risks are acknowledged (crowded sector, macro volatility), but analysts upgrade the stock to “Strong Buy”, citing high-quality revenues and asymmetrical upside.
✅ Five Laws Epistemic Integrity Evaluation
✅ 1. Truthfulness of Information
🟢 Verdict: Fully Compliant
All revenue, FCF, and SBC data sourced from Seeking Alpha and public filings.
PLTR stock performance (2023–2025) accurately described.
EPS projections clearly attributed to consensus models.
No misrepresentations or false numerical claims detected.
✅ 2. Source Referencing
🟢 Verdict: Compliant
All financial data visuals and commentary trace back to Seeking Alpha, with prior rating history transparently included.
Historical comparisons (PLTR case) are well-supported.
No anonymous or unverifiable sources used.
Sourcing structure meets investment-grade clarity.
✅ 3. Reliability & Accuracy
🟢 Verdict: Compliant
Uses correct metrics (TTM FCF, P/S, EPS) and separates adjusted earnings from GAAP.
Avoids overstatements: acknowledges that GAAP net income is still emerging.
Correctly explains operating leverage mechanics in SaaS.
Analysis remains conservative and realistic.
✅ 4. Contextual Judgment
🟢 Verdict: Compliant
Compares S with PLTR while noting differences in TAM and strategic verticals.
Explains risks of high-growth tech exposure in down cycles.
Places S in competitive context (CrowdStrike, PANW) with valuation benchmarking.
Shows excellent macro–micro contextual integration.
✅ 5. Inference Traceability
🟢 Verdict: Compliant
Clear logic: revenue strength → cash flow inflection → undervaluation → expected re-rating.
Multiple financial datapoints underpin the "Strong Buy" upgrade.
Transparent articulation of both upside and downside scenarios.
Inference chains are explicit, documented, and testable.
🧠 Core Investment Thesis
SentinelOne shows the classic traits of a misunderstood growth stock:
AI-powered moat in endpoint security.
A high-retention SaaS model with strong gross margins.
Delayed investor enthusiasm due to optics of unprofitability and SBC dilution — similar to pre-breakout Palantir.
Now, the shift is underway:
Opex deceleration + margin expansion suggest inflection point.
FCF strength implies operational discipline.
2028 EPS forecast: ~$0.50, indicating accelerating leverage.
📊 Financial Snapshot
MetricValue (TTM)Revenue$864 millionFree Cash Flow (FCF)$214 million (25%)SBC (Declining)Still elevated, but droppingCurrent P/S~6xCurrent P/FCF~27xProjected 2028 EPS~$0.50
🔍 Comparison with Peers
CrowdStrike, Palo Alto Networks: Trade at significantly higher multiples despite similar or lower projected growth.
Palantir Parallel: High initial skepticism → misunderstood model → sudden market re-rating as profitability and AI traction become undeniable.
⚠️ Risks
Crowded Sector: SentinelOne competes against larger, well-capitalized players.
Macro Exposure: High-growth tech names may see amplified drawdowns in downturns.
Market Fatigue: Investors may delay re-rating until multiple quarters of profitability are sustained.
📈 Conclusion
The article sees SentinelOne as a rare asymmetrical setup: strong revenue quality, early-stage profitability, and unjustifiably low valuation. With forward estimates showing margin expansion and earnings inflection, the authors argue the market has not yet “priced in” the transformation underway.
Verdict: 🟢 Strong Buy
SentinelOne may not be Palantir — but it's standing at a similar precipice.
