Taking everything into account, DDOG scores 5 out of 10 in our fundamental rating. DDOG was compared to 278 industry peers in the Software industry. DDOG has an excellent financial health rating, but there are some minor concerns on its profitability. DDOG shows excellent growth, but is valued quite expensive already.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year DDOG was profitable.
DDOG had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: DDOG reported negative net income in multiple years.
In the past 5 years DDOG always reported a positive cash flow from operatings.

1.2 Ratios

DDOG has a better Return On Assets (1.76%) than 60.79% of its industry peers.
DDOG has a better Return On Equity (3.10%) than 63.31% of its industry peers.

		Industry Rank	Sector Rank
ROA	1.76%
ROE	3.1%
ROIC	N/A

ROA(3y)0.91%

ROA(5y)0.11%

ROE(3y)1.87%

ROE(5y)0.21%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

Looking at the Profit Margin, with a value of 3.32%, DDOG is in the better half of the industry, outperforming 61.51% of the companies in the same industry.
The Gross Margin of DDOG (79.94%) is better than 81.30% of its industry peers.
DDOG's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	N/A
PM (TTM)	3.32%
GM	79.94%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y1.52%

GM growth 5Y1.37%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

DDOG does not have a ROIC to compare to the WACC, probably because it is not profitable.
DDOG has more shares outstanding than it did 1 year ago.
The number of shares outstanding for DDOG has been increased compared to 5 years ago.
DDOG has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 11.70 indicates that DDOG is not in any danger for bankruptcy at the moment.
DDOG has a better Altman-Z score (11.70) than 91.73% of its industry peers.
DDOG has a debt to FCF ratio of 1.14. This is a very positive value and a sign of high solvency as it would only need 1.14 years to pay back of all of its debts.
The Debt to FCF ratio of DDOG (1.14) is better than 74.46% of its industry peers.
DDOG has a Debt/Equity ratio of 0.29. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.29, DDOG is not doing good in the industry: 60.07% of the companies in the same industry are doing better.
Even though the debt/equity ratio score it not favorable for DDOG, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.29
Debt/FCF	1.14
Altman-Z	11.7

ROIC/WACCN/A

WACC11.08%

2.3 Liquidity

DDOG has a Current Ratio of 3.66. This indicates that DDOG is financially healthy and has no problem in meeting its short term obligations.
DDOG's Current ratio of 3.66 is fine compared to the rest of the industry. DDOG outperforms 79.86% of its industry peers.
A Quick Ratio of 3.66 indicates that DDOG has no problem at all paying its short term obligations.
With a decent Quick ratio value of 3.66, DDOG is doing good in the industry, outperforming 79.86% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	3.66
Quick Ratio	3.66

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 10.73% over the past year.
Measured over the past years, DDOG shows a very strong growth in Earnings Per Share. The EPS has been growing by 54.87% on average per year.
DDOG shows a strong growth in Revenue. In the last year, the Revenue has grown by 26.63%.
DDOG shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 49.22% yearly.

EPS 1Y (TTM)10.73%

EPS 3Y54.87%

EPS 5YN/A

EPS Q2Q%19.57%

Revenue 1Y (TTM)26.63%

Revenue growth 3Y37.67%

Revenue growth 5Y49.22%

Sales Q2Q%28.35%

3.2 Future

The Earnings Per Share is expected to grow by 19.92% on average over the next years. This is quite good.
Based on estimates for the next years, DDOG will show a very strong growth in Revenue. The Revenue will grow by 21.44% on average per year.

EPS Next Y13.9%

EPS Next 2Y14.99%

EPS Next 3Y17.31%

EPS Next 5Y19.92%

Revenue Next Year27.52%

Revenue Next 2Y24.25%

Revenue Next 3Y22.99%

Revenue Next 5Y21.44%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 66.39, which means the current valuation is very expensive for DDOG.
DDOG's Price/Earnings ratio is in line with the industry average.
DDOG is valuated expensively when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 54.08, the valuation of DDOG can be described as expensive.
DDOG's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, DDOG is valued quite expensively.

		Industry Rank	Sector Rank
PE	66.39
Fwd PE	54.08

4.2 Price Multiples

DDOG's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of DDOG is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	52.77
EV/EBITDA	3275.89

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates DDOG does not grow enough to justify the current Price/Earnings ratio.
DDOG's earnings are expected to grow with 17.31% in the coming years. This may justify a more expensive valuation.