DigitalOcean Holdings, Inc.
DigitalOcean Holdings, Inc. Fundamental Analysis
DigitalOcean Holdings, Inc. (DOCN) shows moderate financial fundamentals with a PE ratio of 22.90, profit margin of 29.15%, and ROE of -1.53%. The company generates $0.9B in annual revenue with strong year-over-year growth of 12.66%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 132.0/100 based on profitability, valuation, growth, and balance sheet metrics. The A grade reflects excellent fundamentals and strong overall stability.
Fundamental Health Score
We analyze DOCN's fundamental strength across five key dimensions:
Efficiency Score
ExcellentDOCN demonstrates superior asset utilization.
Valuation Score
ExcellentDOCN trades at attractive valuation levels.
Growth Score
ModerateDOCN shows steady but slowing expansion.
Financial Health Score
ExcellentDOCN maintains a strong and stable balance sheet.
Profitability Score
ModerateDOCN maintains healthy but balanced margins.
Key Financial Metrics
Is DOCN Expensive or Cheap?
P/E Ratio
DOCN trades at 22.90 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, DOCN's PEG of 0.23 indicates potential undervaluation.
Price to Book
The market values DigitalOcean Holdings, Inc. at -82.85 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 12.94 times EBITDA. This signals the market has high growth expectations.
How Well Does DOCN Make Money?
Net Profit Margin
For every $100 in sales, DigitalOcean Holdings, Inc. keeps $29.15 as profit after all expenses.
Operating Margin
Core operations generate 17.45 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-1.53 in profit for every $100 of shareholder equity.
ROA
DigitalOcean Holdings, Inc. generates $14.60 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
DigitalOcean Holdings, Inc. generates strong operating cash flow of $328.00M, reflecting robust business health.
Free Cash Flow
DigitalOcean Holdings, Inc. generates strong free cash flow of $169.42M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.85 in free cash annually.
FCF Yield
DOCN converts 2.93% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
22.90
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.23
vs 25 benchmark
P/B Ratio
Price to book value ratio
-82.85
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.68
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-22.89
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.13
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-1.53
vs 25 benchmark
ROA
Return on assets percentage
0.15
vs 25 benchmark
ROCE
Return on capital employed
0.11
vs 25 benchmark
How DOCN Stacks Against Its Sector Peers
| Metric | DOCN Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 22.90 | 35.19 | Better (Cheaper) |
| ROE | -152.99% | 1155.00% | Weak |
| Net Margin | 29.15% | -127067.00% (disorted) | Strong |
| Debt/Equity | -22.89 | 0.41 | Strong (Low Leverage) |
| Current Ratio | 1.13 | 4.71 | Neutral |
| ROA | 14.60% | -314918.00% (disorted) | Strong |
DOCN outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews DigitalOcean Holdings, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
252.03%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
340.40%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
714.24%
Industry Style: Growth, Innovation, High Beta
High Growth