This fall, data software company Palantir Technologies (PLTR -0.21%) will approach its third anniversary since going public. The stock has disappointed investors thus far, sitting about 20% below the $10 mark that shares began trading at.

Palantir's business performance has been a mixed bag over the past couple of years. While the company has grown a lot since going public, it is also seemingly falling short on some promises made just a year ago.

Whether the stock is worth buying today depends on how patient you're willing to be. Here is what you need to know.

Palantir is not following through on promised growth

Management set high expectations in early 2022, declaring that revenue would grow by at least 30% in 2022 and the following three years. Palantir's enthusiasm was understandable: It grew revenue by 41% year over year in 2021, and there are many growth opportunities in front of it. After all, data has become integral to everything from running a company to securing the U.S. against threats.

Palantir builds customized software solutions on its two platforms: Gotham for government clients and Foundry for commercial customers. The software helps identify trends, aid decision-making, and string together data from various sources. That can translate to spotting fraud, maximizing military forces, or optimizing a company's supply chain in the real world.

PLTR Revenue Growth Estimate for Current Fiscal Year Chart

PLTR revenue growth estimate for current fiscal year data by YCharts. YoY = year oer year.

But revenue growth has slowed since early 2022, and Palantir grew sales by just 24% year over year in 2022. Missing your benchmark months after making lofty promises isn't a good look. Analysts have lowered their expectations, and consensus revenue-growth estimates for this year are in the mid-teens, falling short of Palantir's original promise.

Are Palantir's growth days over?

Investing would be easy if every company's path was a smooth upward trajectory and all that shareholders had to do was hold and sleep well at night. Unfortunately, that's often not the reality, so what's Palantir's deal?

Investors can probably point to an economy that has deteriorated throughout 2022. Companies have guided for slower growth across Wall Street, and Palantir has some things working against it.

Often comparing its product to an operating system, Palantir isn't a simple off-the-shelf offering. It's mission-critical software that works its way into a company's or organization's DNA. That creates a long, multistep sales process, and the company has just 260 commercial customers despite launching Foundry more than a decade ago.

Palantir's highly specialized services also mean they don't come cheap. Enterprises can buy access to Foundry through Amazon's AWS marketplace for $1 million monthly. That alone eliminates a lot of potential customers, and big corporations are currently tightening their belts, laying off thousands of workers. Even if Palantir's product is fantastic, it's harder to justify that spending right now.

Should investors buy shares today?

The good news is that Palantir recently crossed a crucial threshold when it generated profits on the basis of generally accepted accounting principles (GAAP) in the fourth quarter.

Investors sometimes emphasize profitability over revenue growth in a shaky market, which could bode well for Palantir. Management didn't provide GAAP guidance for 2023. However, analysts expect earnings per share (EPS) of around $0.20, valuing shares at a forward price-to-earnings ratio (P/E) of 40. 

PLTR PE Ratio (Forward) Chart

PLTR PE ratio (forward) data by YCharts.

Earnings growth could drive long-term returns as future revenue growth outpaces Palantir's expenses. Analysts believe EPS could average 54% annual growth over the next three to five years. In other words, Palantir could quickly grow into a valuation that might seem expensive today but might not be in the future.

Sure, Palantir's revenue growth needs improvement, but given the challenging environment facing companies today (especially in tech), investors have plenty to build a solid investment thesis around.