DocuSign Inc (DOCU, Financial), a prominent player in the software industry, has recently witnessed a notable uptick in its stock performance. With a current market capitalization of $11.88 billion and a stock price of $58.27, the company has experienced a 2.49% gain over the past week and an impressive 12.49% gain over the past three months. This positive trajectory is underscored by the GF Value of $85.59, which suggests that the stock is significantly undervalued compared to its past GF Value of $127.59. Both the current and past GF Valuations indicate that DocuSign's stock is significantly undervalued, presenting a potentially attractive opportunity for value investors.
Introduction to DocuSign Inc
DocuSign Inc, established in 2003 and public since May 2018, is at the forefront of digital transformation with its Agreement Cloud platform. This suite of software solutions enables users to automate the agreement process and securely collect electronic signatures from virtually any device. As businesses continue to embrace digital workflows, DocuSign's offerings become increasingly relevant, positioning the company for potential growth in the expanding market of e-signature and agreement automation solutions.
Assessing DocuSign's Profitability
Despite its market position, DocuSign's Profitability Rank stands at 3/10, reflecting certain challenges in its financial performance. The company's operating margin is currently at 1.92%, which is better than 47.19% of companies in the industry. Its ROE (Return on Equity) is 7.07%, surpassing 59.37% of its peers, while the ROA (Return on Assets) stands at 1.67%, and ROIC (Return on Invested Capital) is at 1.19%. These figures suggest that while DocuSign is profitable, there is room for improvement when compared to industry standards.
Growth Prospects of DocuSign
DocuSign's growth narrative is more optimistic, with a Growth Rank of 7/10. The company has demonstrated a robust 3-Year Revenue Growth Rate per Share of 31.50%, outperforming 85.61% of its industry counterparts. Its 5-Year Revenue Growth Rate per Share is lower at 3.70%, yet it still surpasses 39.99% of the industry. Looking ahead, the estimated Total Revenue Growth Rate for the next 3 to 5 years is 7.74%. Additionally, the 3-Year EPS without NRI Growth Rate matches the revenue growth at 31.50%, and the 5-Year EPS without NRI Growth Rate is even higher at 33.10%. The future EPS Growth Rate (3Y to 5Y Est) is projected at 16.76%, indicating that analysts are optimistic about the company's earnings potential.
Notable Shareholders in DocuSign
DocuSign's shareholder base includes several prominent investors. Philippe Laffont (Trades, Portfolio) leads the pack with 4,849,014 shares, representing a 2.38% stake in the company. Following him is Jim Simons (Trades, Portfolio), holding 2,546,300 shares, which translates to a 1.25% share percentage. Ray Dalio (Trades, Portfolio) also has a vested interest in DocuSign, with 130,793 shares, amounting to a 0.06% stake. These significant holders reflect a vote of confidence in the company's future prospects.
Competitive Landscape
When compared to its closest competitors, DocuSign maintains a competitive edge in market capitalization. Elastic NV (ESTC, Financial) has a market cap of $10.52 billion, Procore Technologies Inc (PCOR, Financial) is valued at $11.49 billion, and Guidewire Software Inc (GWRE, Financial) stands at $9.71 billion. These figures place DocuSign in a strong position within the software industry, suggesting that it holds its own against similarly sized companies.
Conclusion
In summary, DocuSign Inc's recent stock performance has been impressive, with significant gains over the past three months and a current valuation that indicates the stock is significantly undervalued. The company's profitability metrics, while moderate, show potential for improvement. Growth prospects appear strong, with high growth rates in revenue and earnings per share. The confidence of notable shareholders and a competitive stance in the market cap rankings against similar companies further bolster the case for DocuSign as a company to watch. Investors seeking value in the software industry may find DocuSign an intriguing option, given its current market dynamics and future growth potential.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
