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DocuSign (DOCU) Gains But Lags Market: What You Should Know

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In the latest trading session, DocuSign (DOCU - Free Report) closed at $128.77, marking a +1.22% move from the previous day. This move lagged the S&P 500's daily gain of 1.67%. At the same time, the Dow added 1.53%, and the tech-heavy Nasdaq gained 2.08%.

Investors will be hoping for strength from DOCU as it approaches its next earnings release, which is expected to be June 4, 2020. In that report, analysts expect DOCU to post earnings of $0.11 per share. This would mark year-over-year growth of 57.14%. Meanwhile, our latest consensus estimate is calling for revenue of $284 million, up 32.74% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.53 per share and revenue of $1.31 billion, which would represent changes of +70.97% and +34.43%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for DOCU. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. DOCU is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note DOCU's current valuation metrics, including its Forward P/E ratio of 238.75. For comparison, its industry has an average Forward P/E of 32.26, which means DOCU is trading at a premium to the group.

Investors should also note that DOCU has a PEG ratio of 5.11 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Technology Services industry currently had an average PEG ratio of 3.3 as of yesterday's close.

The Technology Services industry is part of the Business Services sector. This group has a Zacks Industry Rank of 62, putting it in the top 25% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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