DocuSign (DOCU) reported strong third-quarter earnings yesterday that sent shares 3% higher in Friday morning’s trading session. The stock has now rallied more than 8% in the past week.
Revenue for the quarter climbed 9% YoY to $700.4 million, well above the Wall Street consensus of $690 million.
DocuSign also outperformed the analyst consensus on the bottom line, reporting adjusted earnings per share of 79 cents compared to the 63 cents that was expected. This works out to 19 cents per share under GAAP.
The company’s CEO, Allan Thygesen, attributes success to an increased pace of innovation and product release. DocuSign has also been relentless in expanding the range of purchase options for its customers, offering more self-service options.
Just a few months back Thygesen mentioned that, even as the company performs better than expected, macroeconomic conditions are challenging. He was asked about those conditions this time around too, and said that they have stabilized compared to the first half of the year.
The company has struggled since the COVID-19 pandemic dwindled down, but it’s been on the road to recovery so far this year. Just last quarter we wrote about DocuSign raising its full-year guidance.
Speaking of guidance, the company has revisited its guidance for fiscal 2024 again. The expectation is now for revenue between $2.746 billion and $2.75 billion. This would be a 9% growth should the company come at the top end. Analysts are expecting $2.73 billion.
All that being said, is today’s news a green light to buy DOCU? The stock has plummeted from its pandemic highs of more than $310/share, sitting at just under $50/share today.
However, the stock is rallying in the right direction – and we’ve found something in assessing DOCU through the VectorVest stock analyzer. Here’s what you need to know…
DOCU Has Fair Upside Potential, Poor Safety, and Very Good Timing
VectorVest saves you time and stress while empowering you to win more trades with less work. It's all based on a proprietary stock rating system that gives you clear, actionable insights in 3 simple ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. But, you’re even offered a clear buy, sell, or hold recommendation for any given stock at any given time based on the overall VST rating. As for DOCU:
- Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out) to AAA corporate bond rates and risk. It offers much better insight than a simple comparison of price to value alone. The RV rating of 1.04 is considered fair for DOCU.
- Poor Safety: The RV rating is a risk indicator computed from the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, price volatility, sales volume, and other factors. DOCU has a poor RS rating of 0.76 right now.
- Very Good Timing: This is where things get interesting, as there is no denying the positive price trend pushing DOCU higher. The stock has a very good RT rating of 1.29. It’s based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.07 is considered fair for DOCU, and it's accompanied by a BUY recommendation. Learn more about this opportunity, including insights on setting your stop loss, with a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. DOCU has now reported back to back quarters of impressive growth, sending shares 3% higher so far in Friday’s trading session. The stock may have poor safety, but its fair upside potential and very good timing have earned it a BUY recommendation in the VectorVest system.
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