PL Stock Lags Industry, Trades at Premium: What Should Investors Know?

Shares of Planet Labs PL have lost 11.9% in the past three months, underperforming the industry, its sector, as well as the Zacks S&P 500 composite. Planet Labs is a leading provider of Earth-imaging data and geospatial analytics, operating the largest fleet of Earth-observation satellites globally…

Shares of Planet Labs PL have lost 11.9% in the past three months, underperforming the industry, its sector, as well as the Zacks S&P 500 composite. Planet Labs is a leading provider of Earth-imaging data and geospatial analytics, operating the largest fleet of Earth-observation satellites globally.

PL vs. Industry, Sector, S&P 500 in 3 Months

Shares of Rocket Lab RKLB, its peer, have gained 47.7% in the past three months, while those of BlackSky Technology BKSY, another peer, have lost 6.7% in the same time frame.

PL Shares Are Expensive

The stock is overvalued compared with its industry. It is currently trading at a price-to-sales multiple of 22.76, higher than the industry average of 3.15 and the median of 3.8 over three years.

PL is relatively cheap compared to RKLB but expensive compared to BKSY.

The Case for PL Stock

Planet Labs generates most of its revenues through a combination of fixed-price subscription agreements and usage-based contracts, delivering satellite imagery and geospatial data analytics to governments and large enterprises via its cloud-based platform. Revenue growth has been driven by an expanding subscription base, rising government demand and a strategic emphasis on higher-value satellite services and advanced analytics.

The company ended the first quarter of fiscal 2027 with backlog increasing 72% year over year to more than $906 million, providing strong revenue visibility and supporting expectations for faster growth. Management projects fiscal 2027 revenues of $425-$441 million.

Planet Labs has increasingly prioritized large government and defense contracts, which offer greater revenue stability and long-term visibility. Although this business remains its primary growth driver, management continues to view the commercial market as a significant long-term opportunity. Ongoing enhancements to its platform are expected to broaden commercial adoption. In particular, AI-powered analytics, initially developed for government customers, are creating new commercial opportunities across supply chain monitoring, surveillance, operational optimization, insurance risk assessment, financial analysis, energy management and agriculture.

Despite these growth prospects, Planet Labs remains unprofitable, and meaningful profitability is unlikely in the near term. Continued investments in satellite infrastructure, elevated research and development spending, and high operating expenses continue to put pressure on margins. After five consecutive years of losses, the company is expected to remain in the red through fiscal 2027, while returns on equity and invested capital remain well below industry averages. For fiscal 2027, management expects a non-GAAP gross margin of 52-54% and adjusted EBITDA ranging from breakeven to a profit of $10 million, indicating that sustained profitability is still some distance away.

Planet Labs Growth Projections

The Zacks Consensus Estimate for fiscal 2027 revenues indicates a 41.9% year-over-year increase, while that for earnings suggests a 75% year-over-year decline. The consensus estimate for fiscal 2028 revenues indicates a 32.2% year-over-year increase, while that for earnings suggests an increase of 138.1% year over year.

The consensus estimate for fiscal 2027 and 2028 earnings has moved south in the past 30 days.

The consensus estimate for 2026 earnings of RKLB has moved south in the past 30 days, while that for BKSY has 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, pessimistic analyst sentiment and a VGM Score of F, it is better to avoid this Zacks Rank #4 (Sell) stock for now.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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