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Stronghold Digital Mining (SDIG - Free Report) is a Zacks Rank #3 (Hold) that has a D for Value and an A for Growth. Stronghold Digital is in the business of mining bitcoin and selling it to fund operations. The price of SDIG stock surges in December as investors piled into Bitcoin related names in anticipation of SEC approval of Bitcoin ETFs. On top of the ETF, there is a “halving” of Bitcoin coming in April of this year and that will be another strong catalyst for Bitcoin miners like Stronghold Digital. Let’s explore more about this company in this Bull of The Day article.
Description
Stronghold Digital Mining, Inc. is a vertically integrated crypto asset mining company, which engages in mining Bitcoin. It operates the Energy Operations and Cryptocurrency Operations segments. The company was founded by Gregory Allan Beard and William B. Spence on March 19, 2021 and is headquartered in New York, NY.
December Surge And Short Interest
When the Federal Reserve declined to increase interest rates in December they also released a dot plot that indicated that rates were likely to come down in 2024. The long awaited pivot will likely force cash from money market accounts and back into the market. Many investors rushed to buy some of the higher beta / beaten down small cap stocks like Stronghold Digital (SDIG - Free Report)
Stronghold Digital (SDIG - Free Report) saw its stock price more than double in the month leaving investors waiting for a dip in price in order to build a position in the name. That has come over the last few days as the stock has slipped from more than $11 back down to $6.
Those who have waited for pull back now have a great chance to see their investment prosper. On the flip side, the short sellers have not built a very large position in the stock with only 7.8% of the float sold short. There is a lag in reporting short interest data so we are working with data that was published on December 27 but was accurate as of December 15. The next publication date will be January 10, but again, the lag puts the date of accuracy closer to December 29 when the stock was peaking.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For Stronghold Digital, I see three beats of the Zacks Consensus Estimate and one miss over the last year. The average positive earnings surprise over the last year works out to be 34%.
Earnings Estimates Revisions
Earnings estimates revisions is what the Zacks Rank is all about.
For SDIG estimates are holding still.
The Zacks Rank tells us which stocks are seeing positive earnings estimate revisions so it makes sense that this stock has no positive or negative revisions over the last 60 days when it is a Zacks Rank #3 (Hold).
A key idea in the estimates for SDIG should be noted here. The company is slated to lose $1.56 for the full year 2023 but estimates are calling for the company to be profitable in 2024 by earning $0.08.
Accelerating Growth
This year the company is looking for 21% topline contraction in 2023, but the story changes in 2024. The consensus estimate for revenue is calling for 47% year over year growth in 2024. Accelerating growth on top is a great signal.
Valuation
The forward PE works out to be 82.5x, which might scare some investors off, but the probability of estimates increasing down the road will probably serve to help lower the forward PE. The price to book of 0.76x means that at current prices, investors are buying the stock for less than the assets on the books. Value investors love to see a low price to book multiple. Price to sales of 0.9x suggests that the market doesn’t fully value the sales of the company, but with Bitcoin set to surge thanks to the probable approval of ETFs and the halving, that should change dramatically.
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Bull Of The Day: Stronghold Digital Mining (SDIG)
Stronghold Digital Mining (SDIG - Free Report) is a Zacks Rank #3 (Hold) that has a D for Value and an A for Growth. Stronghold Digital is in the business of mining bitcoin and selling it to fund operations. The price of SDIG stock surges in December as investors piled into Bitcoin related names in anticipation of SEC approval of Bitcoin ETFs. On top of the ETF, there is a “halving” of Bitcoin coming in April of this year and that will be another strong catalyst for Bitcoin miners like Stronghold Digital. Let’s explore more about this company in this Bull of The Day article.
Description
Stronghold Digital Mining, Inc. is a vertically integrated crypto asset mining company, which engages in mining Bitcoin. It operates the Energy Operations and Cryptocurrency Operations segments. The company was founded by Gregory Allan Beard and William B. Spence on March 19, 2021 and is headquartered in New York, NY.
December Surge And Short Interest
When the Federal Reserve declined to increase interest rates in December they also released a dot plot that indicated that rates were likely to come down in 2024. The long awaited pivot will likely force cash from money market accounts and back into the market. Many investors rushed to buy some of the higher beta / beaten down small cap stocks like Stronghold Digital (SDIG - Free Report)
Stronghold Digital (SDIG - Free Report) saw its stock price more than double in the month leaving investors waiting for a dip in price in order to build a position in the name. That has come over the last few days as the stock has slipped from more than $11 back down to $6.
Those who have waited for pull back now have a great chance to see their investment prosper. On the flip side, the short sellers have not built a very large position in the stock with only 7.8% of the float sold short. There is a lag in reporting short interest data so we are working with data that was published on December 27 but was accurate as of December 15. The next publication date will be January 10, but again, the lag puts the date of accuracy closer to December 29 when the stock was peaking.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For Stronghold Digital, I see three beats of the Zacks Consensus Estimate and one miss over the last year. The average positive earnings surprise over the last year works out to be 34%.
Earnings Estimates Revisions
Earnings estimates revisions is what the Zacks Rank is all about.
For SDIG estimates are holding still.
The Zacks Rank tells us which stocks are seeing positive earnings estimate revisions so it makes sense that this stock has no positive or negative revisions over the last 60 days when it is a Zacks Rank #3 (Hold).
A key idea in the estimates for SDIG should be noted here. The company is slated to lose $1.56 for the full year 2023 but estimates are calling for the company to be profitable in 2024 by earning $0.08.
Accelerating Growth
This year the company is looking for 21% topline contraction in 2023, but the story changes in 2024. The consensus estimate for revenue is calling for 47% year over year growth in 2024. Accelerating growth on top is a great signal.
Valuation
The forward PE works out to be 82.5x, which might scare some investors off, but the probability of estimates increasing down the road will probably serve to help lower the forward PE. The price to book of 0.76x means that at current prices, investors are buying the stock for less than the assets on the books. Value investors love to see a low price to book multiple. Price to sales of 0.9x suggests that the market doesn’t fully value the sales of the company, but with Bitcoin set to surge thanks to the probable approval of ETFs and the halving, that should change dramatically.