With a daily gain of 3.94% and a robust 3-month gain of 27.05%, Docebo Inc (DCBO, Financial) has demonstrated notable market performance. The company's Earnings Per Share (EPS) (EPS) stands at $0.22, prompting investors to ask: is the stock significantly undervalued? The following analysis delves into the valuation of Docebo (DCBO) to answer this pressing question and provide investors with a clearer picture of the company's market standing.
Company Introduction
Docebo Inc (DCBO, Financial) is a key player in the cloud-based learning management systems sector. The company's subscription model is tailored with an initial fixed term ranging from one to three years, offering no convenience termination option for customers. Revenue is primarily generated from customers in North America, with charges based on a per-learner, per-module basis that varies with the organization's size and complexity. Currently, Docebo's market cap is $1.40 billion, with sales reaching $161 million. A critical comparison between the stock price of $44.86 and the GF Value, estimated at $90.83, suggests a potential undervaluation, warranting a deeper investigation into the company's intrinsic value.
Summarize GF Value
The GF Value is a unique measure that reflects the intrinsic value of a stock, taking into account historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. If a stock's price substantially deviates from the GF Value Line, it could indicate overvaluation or undervaluation, with corresponding implications for future returns. According to this method, Docebo (DCBO, Financial) appears significantly undervalued, suggesting that the long-term return on its stock could potentially outpace its business growth.
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Financial Strength and Stability
Investors often seek companies with robust financial strength to mitigate the risk of permanent capital loss. Key indicators such as the cash-to-debt ratio, which for Docebo stands at a commendable 75.18, provide insight into the company's financial solidity. Ranking better than 80.7% of its peers in the Software industry, Docebo's overall financial strength score is 7 out of 10, signifying a fair financial status.
Profitability and Growth Prospects
Profitability is a crucial consideration for investors, with consistent profitability over time indicating a safer investment. Docebo has achieved profitability in 1 out of the past 10 years, with a 12-month revenue of $161 million and an EPS of $0.22. However, the company's operating margin of -2.54% raises concerns, falling below 60.55% of companies within the Software industry. Despite this, Docebo's annual revenue growth rate of 36.5% outperforms 88.3% of industry competitors, showcasing significant growth potential.
ROIC vs WACC Analysis
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can further reveal its profitability. Ideally, ROIC should exceed WACC to indicate efficient capital usage. For Docebo, the past 12 months have seen an ROIC of -4.03 and a WACC of 13.22, suggesting that the company's investment returns are not meeting its capital costs.
Concluding Thoughts
In conclusion, Docebo (DCBO, Financial) appears to be significantly undervalued based on current market prices. While the company's financial condition is fair, its profitability ranks poorly compared to industry peers. However, with its strong growth indicators, Docebo presents an intriguing opportunity for value investors. To gain deeper insights into Docebo's financials, investors can explore the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
