DIGITALOCEAN HOLDINGS INC (DOCN) Stock Fundamental Analysis
USA - NYSE:DOCN - US25402D1028 - Common Stock
36.98 USD
+1.29 (+3.61%)
36.98 USD
0 (0%)
Taking everything into account, DOCN scores 5 out of 10 in our fundamental rating. DOCN was compared to 86 industry peers in the IT Services industry. DOCN has only an average score on both its financial health and profitability. DOCN is not priced too expensively while it is growing strongly. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
In the past year DOCN was profitable.
In the past year DOCN had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: DOCN reported negative net income in multiple years.
In the past 5 years DOCN always reported a positive cash flow from operatings.
1.2 Ratios
DOCN has a Return On Assets of 7.35%. This is in the better half of the industry: DOCN outperforms 76.74% of its industry peers.
DOCN has a better Return On Invested Capital (6.93%) than 62.79% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.35% | ||
| ROE | N/A | ||
| ROIC | 6.93% |
ROA(3y)1.65%
ROA(5y)-1.22%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
DOCN has a better Profit Margin (15.18%) than 91.86% of its industry peers.
With an excellent Operating Margin value of 15.66%, DOCN belongs to the best of the industry, outperforming 84.88% of the companies in the same industry.
DOCN has a Gross Margin of 59.67%. This is amongst the best in the industry. DOCN outperforms 80.23% of its industry peers.
DOCN's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.66% | ||
| PM (TTM) | 15.18% | ||
| GM | 59.67% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.28%
GM growth 5Y2.79%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), DOCN is destroying value.
DOCN has more shares outstanding than it did 1 year ago.
The number of shares outstanding for DOCN has been increased compared to 5 years ago.
The debt/assets ratio for DOCN has been reduced compared to a year ago.
2.2 Solvency
DOCN has an Altman-Z score of 1.81. This is not the best score and indicates that DOCN is in the grey zone with still only limited risk for bankruptcy at the moment.
DOCN's Altman-Z score of 1.81 is on the low side compared to the rest of the industry. DOCN is outperformed by 62.79% of its industry peers.
The Debt to FCF ratio of DOCN is 15.86, which is on the high side as it means it would take DOCN, 15.86 years of fcf income to pay off all of its debts.
DOCN's Debt to FCF ratio of 15.86 is in line compared to the rest of the industry. DOCN outperforms 45.35% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 15.86 | ||
| Altman-Z | 1.81 |
ROIC/WACC0.92
WACC7.55%
2.3 Liquidity
A Current Ratio of 2.27 indicates that DOCN has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.27, DOCN is doing good in the industry, outperforming 66.28% of the companies in the same industry.
DOCN has a Quick Ratio of 2.27. This indicates that DOCN is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 2.27, DOCN is in the better half of the industry, outperforming 67.44% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.27 | ||
| Quick Ratio | 2.27 |
3. Growth
3.1 Past
DOCN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.67%, which is quite impressive.
The Earnings Per Share has been growing by 145.35% on average over the past years. This is a very strong growth
DOCN shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.29%.
DOCN shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 25.09% yearly.
EPS 1Y (TTM)20.67%
EPS 3Y145.35%
EPS 5YN/A
EPS Q2Q%22.92%
Revenue 1Y (TTM)13.29%
Revenue growth 3Y22.13%
Revenue growth 5Y25.09%
Sales Q2Q%13.62%
3.2 Future
Based on estimates for the next years, DOCN will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.98% on average per year.
The Revenue is expected to grow by 13.41% on average over the next years. This is quite good.
EPS Next Y10.65%
EPS Next 2Y6.57%
EPS Next 3Y9.98%
EPS Next 5YN/A
Revenue Next Year14.71%
Revenue Next 2Y14.61%
Revenue Next 3Y14.97%
Revenue Next 5Y13.41%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 17.12 indicates a rather expensive valuation of DOCN.
72.09% of the companies in the same industry are more expensive than DOCN, based on the Price/Earnings ratio.
DOCN's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.30.
Based on the Price/Forward Earnings ratio of 16.96, the valuation of DOCN can be described as correct.
68.60% of the companies in the same industry are more expensive than DOCN, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 22.73. DOCN is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.12 | ||
| Fwd PE | 16.96 |
4.2 Price Multiples
DOCN's Enterprise Value to EBITDA is on the same level as the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of DOCN is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.86 | ||
| EV/EBITDA | 16.9 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
DOCN has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.61
PEG (5Y)N/A
EPS Next 2Y6.57%
EPS Next 3Y9.98%
5. Dividend
5.1 Amount
DOCN does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
36.98
+1.29 (+3.61%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.32%
Inst Owner Change5.49%
Ins Owners0.95%
Ins Owner Change-0.7%
Market Cap3.37B
Analysts75.79
Price Target41.54 (12.33%)
Short Float %14.81%
Short Ratio4
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)23.75%
Min EPS beat(2)23.58%
Max EPS beat(2)23.93%
EPS beat(4)4
Avg EPS beat(4)28.77%
Min EPS beat(4)23.58%
Max EPS beat(4)41.38%
EPS beat(8)8
Avg EPS beat(8)22.77%
EPS beat(12)11
Avg EPS beat(12)23.98%
EPS beat(16)14
Avg EPS beat(16)25.95%
Revenue beat(2)0
Avg Revenue beat(2)-0.98%
Min Revenue beat(2)-1.01%
Max Revenue beat(2)-0.95%
Revenue beat(4)1
Avg Revenue beat(4)-0.71%
Min Revenue beat(4)-1.07%
Max Revenue beat(4)0.2%
Revenue beat(8)3
Avg Revenue beat(8)-0.44%
Revenue beat(12)4
Avg Revenue beat(12)-0.65%
Revenue beat(16)5
Avg Revenue beat(16)-0.75%
PT rev (1m)6.48%
PT rev (3m)6.48%
EPS NQ rev (1m)1.11%
EPS NQ rev (3m)3.66%
EPS NY rev (1m)6.96%
EPS NY rev (3m)8.54%
Revenue NQ rev (1m)0.43%
Revenue NQ rev (3m)1.36%
Revenue NY rev (1m)0.98%
Revenue NY rev (3m)0.98%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.12 | ||
| Fwd PE | 16.96 | ||
| P/S | 4.04 | ||
| P/FCF | 35.86 | ||
| P/OCF | 11.18 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.9 |
EPS(TTM)2.16
EY5.84%
EPS(NY)2.18
Fwd EY5.9%
FCF(TTM)1.03
FCFY2.79%
OCF(TTM)3.31
OCFY8.95%
SpS9.15
BVpS-1.92
TBVpS-6.96
PEG (NY)1.61
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.35% | ||
| ROE | N/A | ||
| ROCE | 8.72% | ||
| ROIC | 6.93% | ||
| ROICexc | 9.36% | ||
| ROICexgc | 15.96% | ||
| OM | 15.66% | ||
| PM (TTM) | 15.18% | ||
| GM | 59.67% | ||
| FCFM | 11.27% |
ROA(3y)1.65%
ROA(5y)-1.22%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.28%
GM growth 5Y2.79%
F-Score7
Asset Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 15.86 | ||
| Debt/EBITDA | 5.79 | ||
| Cap/Depr | 163.25% | ||
| Cap/Sales | 24.9% | ||
| Interest Coverage | 179.62 | ||
| Cash Conversion | 117.02% | ||
| Profit Quality | 74.24% | ||
| Current Ratio | 2.27 | ||
| Quick Ratio | 2.27 | ||
| Altman-Z | 1.81 |
F-Score7
WACC7.55%
ROIC/WACC0.92
Cap/Depr(3y)124.77%
Cap/Depr(5y)130.2%
Cap/Sales(3y)21.36%
Cap/Sales(5y)25.18%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)20.67%
EPS 3Y145.35%
EPS 5YN/A
EPS Q2Q%22.92%
EPS Next Y10.65%
EPS Next 2Y6.57%
EPS Next 3Y9.98%
EPS Next 5YN/A
Revenue 1Y (TTM)13.29%
Revenue growth 3Y22.13%
Revenue growth 5Y25.09%
Sales Q2Q%13.62%
Revenue Next Year14.71%
Revenue Next 2Y14.61%
Revenue Next 3Y14.97%
Revenue Next 5Y13.41%
EBIT growth 1Y63.2%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year71.62%
EBIT Next 3Y33.49%
EBIT Next 5Y25.38%
FCF growth 1Y-10.19%
FCF growth 3Y58.83%
FCF growth 5YN/A
OCF growth 1Y37.51%
OCF growth 3Y28.54%
OCF growth 5Y47.94%