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The market has rallied from its March 23 lows on the hopes that economic activity will start to return to something close to normal as coronavirus lockdowns are slowly lifted. Despite the broad climb, companies that have the ability to expand during social distancing have outperformed.
Tech firms have driven this comeback as many prove somewhat immune to the economic downturn and stay-at-home environment. DocuSign DOCU has certainly surged higher than the broader market and the tech space, and its business is tailor-made for the digital age.
DocuSign, as its name suggests, allows businesses and other organizations the ability to sign contracts and documents electronically on “practically any device, from almost anywhere, at any time.” The company’s offerings are increasingly valuable in our mostly digital-focused business world, which stretches from small mom and pop shops to global titans. DocuSign boasts over half a million customers around the world.
Last spring, the San Francisco-based firm introduced its new DocuSign Agreement Cloud to help firms “automate and connect” their “entire agreement process.” The cloud-based suite offers over a dozen apps for e-signature, document generation, contract lifecycle management, and more, with industry and department-specific solutions.
Investors should also note that DocuSign’s Agreement Cloud has hundreds of pre-built integrations with other applications, including giants such as Microsoft MSFT, Google GOOGL, Salesforce CRM, and more. The company is also coming off a strong fourth quarter of fiscal 2020 that saw it top our estimates and provide upbeat guidance.
DocuSign went public in late April 2018, and found early success before struggling a bit. That said, DOCU shares have skyrocketed 150% in the last 12 months and 90% in 2020 to destroy its industry’s sideways movement. DocuSign has also gotten less love than stay-at-home standouts such as Zoom ZM.
Yet, DocuSign’s business might be a better and more stable long-term play within tech, even if more people do continue to video chat once we are on the other side of the coronavirus. DOCU sign is also trading at a solid discount compared to Zoom, at 16.5X forward 12-months sales vs. 44.4X.
DocuSign’s fiscal 2020 revenue jumped 39% to reach $974.0 million and top fiscal 2019’s 35% sales expansion. “Since introducing the DocuSign Agreement Cloud a year ago, we have dramatically broadened our offerings while maintaining strong growth from eSignature,” CEO Dan Springer in prepared fourth quarter remarks in March.
DocuSign is set to release its first quarter fiscal 2021 results after the market closes on Thursday, June 4. With this in mind, our Zacks estimates call for DOCU’s Q1 revenue to jump roughly 33% to hit $284 million, with its full-year sales projected to climb over 34% to reach $1.31 billion.
On the bottom line, the firm’s adjusted quarterly earnings are expected to climb 57% to come in at $0.11 a share. Better still, DocuSign’s adjusted fiscal year EPS figures are projected to surge 71% in FY21 and 52% in FY22.
DocuSign is currently a Zacks Rank #1 (Strong Buy) that boasts an “A” grade for Growth in our Style Scores system. The company has also crushed our quarterly earnings estimates in the last two periods.
DOCU stock jumped another 9% during regular trading Friday to hit another new high. Some investors might want to wait for the stock to cool off, or wait for its upcoming earnings release. But longer-term investors might look back in a year or two and think DocuSign’s current price looks like a steal.
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