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DigitalOcean Holdings, Inc. (DOCN) Gains As Market Dips: What You Should Know

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DigitalOcean Holdings, Inc. (DOCN - Free Report) closed the most recent trading day at $24.09, moving +0.84% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.94%. Meanwhile, the Dow lost 0.22%, and the Nasdaq, a tech-heavy index, lost 1.53%.

Prior to today's trading, shares of the company had lost 25.99% over the past month. This has lagged the Computer and Technology sector's gain of 3.69% and the S&P 500's gain of 1.85% in that time.

DigitalOcean Holdings, Inc. will be looking to display strength as it nears its next earnings release. In that report, analysts expect DigitalOcean Holdings, Inc. to post earnings of $0.41 per share. This would mark year-over-year growth of 7.89%. Our most recent consensus estimate is calling for quarterly revenue of $173.51 million, up 14.06% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.63 per share and revenue of $684.55 million, which would represent changes of +73.4% and +18.78%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for DigitalOcean Holdings, Inc.These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. DigitalOcean Holdings, Inc. currently has a Zacks Rank of #3 (Hold).

Investors should also note DigitalOcean Holdings, Inc.'s current valuation metrics, including its Forward P/E ratio of 14.68. Its industry sports an average Forward P/E of 36.77, so we one might conclude that DigitalOcean Holdings, Inc. is trading at a discount comparatively.

Investors should also note that DOCN has a PEG ratio of 0.52 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Software stocks are, on average, holding a PEG ratio of 1.61 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 97, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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