DocuSign, Inc. (NASDAQ:DOCU) received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on DocuSign's outlook and valuation to see if the opportunity still exists.
What Is DocuSign Worth?
According to our valuation model, DocuSign seems to be fairly priced at around 9.6% below our intrinsic value, which means if you buy DocuSign today, you'd be paying a fair price for it. And if you believe that the stock is really worth $118.34, then there isn't much room for the share price grow beyond what it's currently trading. In addition to this, DocuSign has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will DocuSign generate?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for DocuSign, at least in the near future.
What This Means For You
Are you a shareholder? DOCU seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on DOCU for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there's less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help gel your views on DOCU should the price fluctuate below its true value.
If you'd like to know more about DocuSign as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with DocuSign, and understanding them should be part of your investment process.
If you are no longer interested in DocuSign, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
