In the financial world, determining the intrinsic value of a stock is crucial. Today, we will explore the valuation of Docebo Inc (DCBO, Financial), a provider of cloud-based learning management systems. Despite a daily loss of -2.44% and a 3-month gain of 19.92%, the stock's Earnings Per Share (EPS) (EPS) stands at 0.22. The question now is, is the stock Significantly Undervalued? Let's delve into an in-depth analysis to answer this question.
Company Snapshot
Docebo Inc (DCBO, Financial) operates in the software industry, providing cloud-based learning management systems. The company's solutions are sold on a subscription model, typically structured with an initial fixed term of between one and three years. The majority of the revenue is derived from customers based in North America. As of September 06, 2023, Docebo (DCBO) trades at $42.14 per share with a market cap of $1.40 billion, which is significantly undervalued compared to its GF Value of $87.47.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, computed considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line denotes the stock's ideal fair trading value. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.
According to GuruFocus' valuation method, Docebo (DCBO, Financial) is significantly undervalued. Consequently, the long-term return of its stock is likely to be much higher than its business growth.
Assessing Financial Strength
Before investing, it's essential to check the financial strength of a company. Docebo has a cash-to-debt ratio of 75.18, which is better than 81.04% of 2737 companies in the Software industry. The overall financial strength of Docebo is 7 out of 10, indicating that the financial strength of Docebo is fair.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Docebo's profitability is ranked 4 out of 10, indicating poor profitability. However, the growth of Docebo is promising, with a 3-year average annual revenue growth of 36.5%, ranking better than 88.55% of 2393 companies in the Software industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) is another way to assess its profitability. Docebo's ROIC is -4.03, and its WACC is 12.45. If the ROIC is higher than the WACC, it implies the company is creating value for shareholders.
Conclusion
In conclusion, the stock of Docebo (DCBO, Financial) is estimated to be significantly undervalued. The company's financial condition is fair, and its profitability is poor. Its growth ranks worse than 0% of 1990 companies in the Software industry. To learn more about Docebo stock, you can check out its 30-Year Financials here.
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