Back to top

Image: Bigstock

DocuSign (DOCU) Banks on Perennial Demand for eSignatures

Read MoreHide Full Article

DocuSign, Inc. (DOCU - Free Report) ,has outperformed its industry in the past six months with its shares surging 14.6%, compared with the industry’s 2.4% increase.

DOCUhas an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.

DocuSign, Inc.’s fourth-quarter fiscal 2023 (ended Jan 31) presented better-than-expected results with both earnings and revenues showing year-over-year growth. Non-GAAP earnings per share (excluding 62 cents from non-recurring items) of 65 cents beat the Zacks Consensus Estimate by 22.6% and grew 35.4% from the year-ago fiscal quarter’s reported figure. Revenues of $659.6 million also surpassed the consensus mark by 3.2% and increased 13.6% from the year-ago fiscal quarter’s reported figure.


Current Situation of DOCU

DocuSign’s primary offering, eSignature has been aiding its topline perennially and has been in continued demand due to its favorable features like virtual and secure signing mechanism and usage in a variety of devices. The company has a largely untapped market which enables DocuSign’s opportunity to expand its eSignature business.

DocuSign’s deepening relationship with Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) is a boon to its future. The company has expanded its strategic partnership with Salesforce. DocuSign and Salesforce jointly develop solutions for the automation of the contract process and expansion of collaboration among organizations that use Salesforce’s Slack. DocuSign made an eSignature integration with Microsoft Teams last year and is currently an official electronic signature provider in Microsoft Teams’ Approvals app.

Some Concerning Points

DocuSign's current ratio at the end of fourth-quarter fiscal 2023 was pegged at 0.74, lower than the current ratio of 0.96 reported at the end of the year-ago quarter. It indicates that the company may have problems meeting its short-term debt obligations.

The company has no plan to pay cash dividends going forward. So, the only way to achieve a return on investment in the company’s stock is share price appreciation, which is not guaranteed.

Zacks Rank and Another Stock to Consider

DOCU currently carries a Zacks Rank #2 (Buy).

Investors interested in in the Zacks Business Services sector can consider Green Dot (GDOT - Free Report) . For second-quarter 2023, the Zacks Consensus Estimate of Green Dot’s revenues suggests a decline of 4.2% year over year to $340.1 million and the same for earnings indicates a 52.7% dip to 35 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters. The company has an average surprise of 37.3%.

GDOT has a VGM score of A and currently sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Published in