DigitalOcean Holdings, Inc. Fundamental Analysis (NYSE: DOCN)
DigitalOcean Holdings, Inc. Fundamental Analysis (NYSE: DOCN)
DigitalOcean Holdings, Inc. (NYSE: DOCN) shows strong financial fundamentals with a PE ratio of 51.96, profit margin of 23.27%, and ROE of 54.71%. The company generates $1.1B in annual revenue with strong year-over-year growth of 15.48%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 63.8/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze DOCN's fundamental strength across five key dimensions:
Efficiency Score
WeakDOCN struggles to generate sufficient returns from assets.
Valuation Score
ModerateDOCN shows balanced valuation metrics.
Growth Score
ModerateDOCN shows steady but slowing expansion.
Financial Health Score
ModerateDOCN shows balanced financial health with some risks.
Profitability Score
ExcellentDOCN achieves industry-leading margins.
Key Financial Metrics
Is DOCN Expensive or Cheap?
P/E Ratio
DOCN trades at 51.96 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, DOCN's PEG of 0.64 indicates potential undervaluation.
Price to Book
The market values DigitalOcean Holdings, Inc. at 14.72 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 39.87 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 $23.27 as profit after all expenses.
Operating Margin
Core operations generate 14.80 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $54.71 in profit for every $100 of shareholder equity.
ROA
DigitalOcean Holdings, Inc. generates $7.53 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 $346.39M, reflecting robust business health.
Free Cash Flow
DigitalOcean Holdings, Inc. generates strong free cash flow of $118.52M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.01 in free cash annually.
FCF Yield
DOCN converts 0.70% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
51.96
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.64
vs 25 benchmark
P/B Ratio
Price to book value ratio
14.72
vs 25 benchmark
P/S Ratio
Price to sales ratio
15.14
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.47
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.31
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.55
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.06
vs 25 benchmark
How DOCN Stacks Against Its Sector Peers
| Metric | DOCN Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 51.96 | 36.60 | Worse (Expensive) |
| ROE | 54.71% | 654.00% | Weak |
| Net Margin | 23.27% | -129691.00% (disorted) | Strong |
| Debt/Equity | 1.47 | 0.27 | Weak (High Leverage) |
| Current Ratio | 1.31 | 5.91 | Neutral |
| ROA | 7.53% | 235.00% | Weak |
DOCN outperforms its industry in 1 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
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
225.91%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
784.99%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
509.64%
Industry Style: Growth, Innovation, High Beta
High Growth