Long-established in the Software industry, GoDaddy Inc (GDDY, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.61%, juxtaposed with a three-month change of 18.28%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of GoDaddy Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 7/10
- GF Value rank: 1/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned GoDaddy Inc a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding GoDaddy Inc's Business
GoDaddy Inc is a provider of domain registration and aftermarket services, website hosting, security, design, and business productivity tools, commerce solutions, and domain registry services. The company primarily targets micro- to small businesses, website design professionals, registrar peers, and domain investors. Since acquiring payment processing platform Poynt in 2021, the company has expanded into omnicommerce solutions, including offering an online payment gateway and offline point-of-sale devices. With a market cap of $22.34 billion and sales of $4.4 billion, GoDaddy operates with a 17.97% operating margin.
Financial Strength Breakdown
GoDaddy Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 4.7 positions it worse than 79% of 1624 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt.
The company's Altman Z-Score is just 2, which is below the safe threshold of 2.99. Additionally, the low cash-to-debt ratio at 0.11 indicates a struggle in handling existing debt levels. The debt-to-equity ratio is 24.99, which is worse than 99.82% of 2196 companies in the Software industry. Furthermore, the debt-to-Ebitda ratio is 4.31, above Joel Tillinghast's warning level of 4.
Conclusion
Considering GoDaddy Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. For investors seeking more robust investment opportunities, exploring companies with stronger GF Scores is advisable.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
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.
