We assign a fundamental rating of 5 out of 10 to DOCU. DOCU was compared to 278 industry peers in the Software industry. Both the profitability and the financial health of DOCU get a neutral evaluation. Nothing too spectacular is happening here. DOCU is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

DOCU had positive earnings in the past year.
In the past year DOCU had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: DOCU reported negative net income in multiple years.
Each year in the past 5 years DOCU had a positive operating cash flow.

1.2 Ratios

DOCU has a Return On Assets of 7.59%. This is in the better half of the industry: DOCU outperforms 78.78% of its industry peers.
The Return On Equity of DOCU (15.25%) is better than 82.37% of its industry peers.
DOCU has a Return On Invested Capital of 9.75%. This is amongst the best in the industry. DOCU outperforms 84.53% of its industry peers.

		Industry Rank	Sector Rank
ROA	7.59%
ROE	15.25%
ROIC	9.75%

ROA(3y)8.62%

ROA(5y)2.54%

ROE(3y)14.69%

ROE(5y)-11.2%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

Looking at the Profit Margin, with a value of 9.57%, DOCU is in the better half of the industry, outperforming 69.42% of the companies in the same industry.
DOCU's Operating Margin of 8.59% is fine compared to the rest of the industry. DOCU outperforms 73.74% of its industry peers.
The Gross Margin of DOCU (79.31%) is better than 78.78% of its industry peers.
DOCU's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	8.59%
PM (TTM)	9.57%
GM	79.31%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y0.53%

GM growth 5Y1.07%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so DOCU is destroying value.
DOCU has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, DOCU has more shares outstanding
There is no outstanding debt for DOCU. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

2.2 Solvency

An Altman-Z score of 3.53 indicates that DOCU is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.53, DOCU is in the better half of the industry, outperforming 66.55% of the companies in the same industry.
There is no outstanding debt for DOCU. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0
Altman-Z	3.53

ROIC/WACC0.88

WACC11.06%

2.3 Liquidity

DOCU has a Current Ratio of 0.73. This is a bad value and indicates that DOCU is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.73, DOCU is not doing good in the industry: 86.69% of the companies in the same industry are doing better.
DOCU has a Quick Ratio of 0.73. This is a bad value and indicates that DOCU is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of DOCU (0.73) is worse than 86.69% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	0.73
Quick Ratio	0.73

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

DOCU shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.96%.
The Earnings Per Share has been growing by 62.84% on average over the past years. This is a very strong growth
The Revenue has grown by 8.45% in the past year. This is quite good.
The Revenue has been growing by 25.04% on average over the past years. This is a very strong growth!

EPS 1Y (TTM)6.96%

EPS 3Y21.69%

EPS 5Y62.84%

EPS Q2Q%12.22%

Revenue 1Y (TTM)8.45%

Revenue growth 3Y12.2%

Revenue growth 5Y25.04%

Sales Q2Q%8.42%

3.2 Future

The Earnings Per Share is expected to grow by 8.69% on average over the next years. This is quite good.
The Revenue is expected to grow by 6.97% on average over the next years.

EPS Next Y8.79%

EPS Next 2Y8.77%

EPS Next 3Y9.1%

EPS Next 5Y8.69%

Revenue Next Year8.37%

Revenue Next 2Y7.59%

Revenue Next 3Y7.63%

Revenue Next 5Y6.97%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 14.24, which indicates a correct valuation of DOCU.
Compared to the rest of the industry, the Price/Earnings ratio of DOCU indicates a rather cheap valuation: DOCU is cheaper than 80.58% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.30, DOCU is valued a bit cheaper.
The Price/Forward Earnings ratio is 12.51, which indicates a correct valuation of DOCU.
Based on the Price/Forward Earnings ratio, DOCU is valued cheaply inside the industry as 82.37% of the companies are valued more expensively.
DOCU's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	14.24
Fwd PE	12.51

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of DOCU indicates a somewhat cheap valuation: DOCU is cheaper than 71.94% of the companies listed in the same industry.
DOCU's Price/Free Cash Flow ratio is rather cheap when compared to the industry. DOCU is cheaper than 90.29% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	10.69
EV/EBITDA	24.94

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of DOCU may justify a higher PE ratio.