Overall DOCU gets a fundamental rating of 5 out of 10. We evaluated DOCU against 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 has a decent growth rate and is not valued too expensively.

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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.
DOCU had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of DOCU (7.59%) is better than 78.42% of its industry peers.
Looking at the Return On Equity, with a value of 15.25%, DOCU belongs to the top of the industry, outperforming 82.01% of the companies in the same industry.
DOCU's Return On Invested Capital of 9.75% is amongst the best of the industry. DOCU outperforms 84.17% 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 69.78% of the companies in the same industry.
The Operating Margin of DOCU (8.59%) is better than 73.74% of its industry peers.
Looking at the Gross Margin, with a value of 79.31%, DOCU is in the better half of the industry, outperforming 78.78% of the companies in the same industry.
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.
Compared to 1 year ago, DOCU has less shares outstanding
The number of shares outstanding for DOCU has been increased compared to 5 years ago.
DOCU has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

An Altman-Z score of 3.75 indicates that DOCU is not in any danger for bankruptcy at the moment.
DOCU's Altman-Z score of 3.75 is fine compared to the rest of the industry. DOCU outperforms 67.63% of its industry peers.
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	3.75

ROIC/WACC0.88

WACC11.1%

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.
DOCU has a Current ratio of 0.73. This is amonst the worse of the industry: DOCU underperforms 86.69% of its industry peers.
A Quick Ratio of 0.73 indicates that DOCU may have some problems paying its short term obligations.
DOCU's Quick ratio of 0.73 is on the low side compared to the rest of the industry. DOCU is outperformed by 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

The Earnings Per Share has been growing slightly by 6.96% over the past year.
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

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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

DOCU is valuated correctly with a Price/Earnings ratio of 15.63.
79.14% of the companies in the same industry are more expensive than DOCU, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of DOCU to the average of the S&P500 Index (27.25), we can say DOCU is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 13.73, the valuation of DOCU can be described as correct.
82.01% of the companies in the same industry are more expensive than DOCU, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of DOCU to the average of the S&P500 Index (25.98), we can say DOCU is valued slightly cheaper.

		Industry Rank	Sector Rank
PE	15.63
Fwd PE	13.73

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 70.14% of the companies listed in the same industry.
89.93% of the companies in the same industry are more expensive than DOCU, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	11.74
EV/EBITDA	26.84

4.3 Compensation for Growth

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