DocuSign Inc (DOCU, Financial), a prominent player in the software industry, has recently experienced a notable uptick in its stock performance. With a current market capitalization of $11.61 billion, the company's shares are trading at $56.94. Over the past week, DocuSign has seen a modest 0.54% gain, while the past three months have been more impressive, with a 12.90% increase in stock price. According to GuruFocus's valuation metrics, DocuSign is currently significantly undervalued, with a GF Value of $85.55, a decrease from the past GF Value of $127.59. This suggests that the stock may have considerable upside potential from its current price level.
Introduction to DocuSign Inc
DocuSign Inc, founded in 2003 and public since May 2018, is revolutionizing the way agreements are handled in the digital age. The company's Agreement Cloud platform offers a suite of applications and integrations for automating the entire contract lifecycle, including the provision of legally binding e-signatures. This cloud-based solution enables users to complete agreements efficiently and securely from virtually any device. As businesses continue to embrace digital transformation, DocuSign's services are increasingly in demand, positioning the company for potential growth in the burgeoning software industry.
Assessing DocuSign's Profitability
Despite its growth prospects, DocuSign's Profitability Rank stands at 3 out of 10, which indicates challenges in this area relative to other companies. The company's operating margin is currently at 1.92%, which is better than 47.21% of companies in the industry. Its ROE (Return on Equity) is 7.07%, surpassing 59.41% of its peers, while the ROA (Return on Assets) stands at 1.67%, outperforming 53.84% of competitors. The ROIC (Return on Invested Capital) is 1.19%, which is also better than 48.61% of the industry. These figures suggest that while DocuSign is profitable, there is room for improvement when compared to industry standards.
Growth Trajectory of DocuSign
DocuSign's Growth Rank is a robust 7 out of 10, reflecting the company's strong expansion in recent years. The 3-Year Revenue Growth Rate per Share is an impressive 31.50%, which is better than 85.57% of companies in the sector. Over a 5-year period, the Revenue Growth Rate per Share is 3.70%, surpassing 40.17% of its industry peers. The company's estimated Total Revenue Growth Rate for the next 3 to 5 years is 7.74%, which is more favorable than 37.09% of the competition. Additionally, the 3-Year EPS without NRI Growth Rate matches the revenue growth at 31.50%, outperforming 76.14% of companies, and the 5-Year EPS without NRI Growth Rate is even higher at 33.10%, better than 84.09% of the industry. The EPS Growth Rate for the next 3 to 5 years is projected at 16.76%, which is more optimistic than 52.54% of the software sector. These growth metrics indicate that DocuSign is not only growing but doing so at a rate that is competitive within its industry.
Key Shareholders in DocuSign
DocuSign's shareholder base includes notable investors who have significant stakes in the company. Philippe Laffont (Trades, Portfolio) leads the pack with 4,849,014 shares, representing 2.38% of the company. Following him is Jim Simons (Trades, Portfolio), holding 2,546,300 shares, which equates to 1.25% ownership. Ray Dalio (Trades, Portfolio) also has a stake in DocuSign, with 130,793 shares, amounting to 0.06% of the company. The presence of these prominent investors may provide additional confidence to potential shareholders, as these figures often signal a vote of confidence in the company's future prospects.
Competitive Landscape
When comparing DocuSign to its closest competitors based on market capitalization, we see that it is in a tight race within the software industry. Elastic NV (ESTC, Financial) has a market cap of $10.97 billion, Procore Technologies Inc (PCOR, Financial) is valued at $11.58 billion, and Guidewire Software Inc (GWRE, Financial) comes in at $9.88 billion. These figures suggest that DocuSign is competitively positioned among its peers, with a market cap that reflects its standing as a significant player in the software solutions space.
Conclusion
In summary, DocuSign Inc's recent stock performance has been positive, with a significant gain over the past three months. The company's valuation indicates that it is significantly undervalued, presenting potential for future growth. While profitability remains an area for improvement, DocuSign's growth metrics are strong, particularly in revenue and EPS growth rates. The company's shareholder base includes respected investors, and its market capitalization is competitive within the software industry. As the digital transformation of business processes continues to accelerate, DocuSign's offerings are well-positioned to meet the increasing demand for efficient and secure agreement solutions.
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.
