MongoDB Inc (MDB, Financial) has experienced a significant daily loss of 10.66%, contrasting with a modest 3-month gain of 1.35%. With a Loss Per Share of 2.64, investors may question whether the current market valuation is justified. Is MongoDB (MDB) truly modestly undervalued as suggested by GuruFocus's proprietary valuation method? The following analysis aims to shed light on this question, providing a detailed examination of MongoDB's financial health and intrinsic value.
Company Introduction
MongoDB Inc (MDB, Financial), founded in 2007, is a pioneer in the document-oriented database sphere, boasting nearly 33,000 paying customers and over 1.5 million free users. The company offers both licenses and subscriptions for its NoSQL database, catering to a diverse array of programming languages and deployment scenarios. With a current stock price of $387.42 and a market cap of $27.90 billion, MongoDB stands below the GF Value of $487.87, suggesting potential undervaluation. This intrinsic value estimate paves the way for a deeper exploration of MongoDB's financial viability and market position.
Summarize GF Value
The GF Value is a calculated measure of a stock's current intrinsic value, factoring in historical trading multiples, a GuruFocus adjustment based on past returns and growth, and projected business performance. The GF Value Line indicates the fair value at which the stock should ideally trade. MongoDB (MDB, Financial)'s stock, with a price of $387.42 per share and a market cap of $27.90 billion, is considered modestly undervalued according to this measure. This valuation implies that MongoDB's long-term stock return may exceed its business growth, offering a potentially attractive investment opportunity.
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Financial Strength
Assessing a company's financial strength is critical to avoid the high risk of permanent capital loss. MongoDB's cash-to-debt ratio stands at 1.6, placing it below 56.59% of its peers in the Software industry. With a financial strength rating of 5 out of 10, MongoDB's financial health is deemed fair, warranting careful consideration by potential investors.
Profitability and Growth
Consistent profitability is a hallmark of a less risky investment. MongoDB, however, has not reported profitability over the past decade. With a 12-month revenue of $1.60 billion and a Loss Per Share of $2.64, its operating margin of -18.39% is concerning. This figure ranks MongoDB lower than 73.61% of companies in the Software industry. Moreover, the profitability rank of 3 out of 10 highlights the company's poor profitability.
Regarding growth, MongoDB's 3-year average annual revenue growth rate of 35.4% is impressive, outpacing 87.82% of its industry counterparts. However, its 3-year average EBITDA growth rate of -21% is less encouraging, ranking lower than 82.72% of the companies in the Software industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another profitability indicator. MongoDB's ROIC of -35.46 is notably lower than its WACC of 11.67, suggesting that the company is not currently generating sufficient cash flow relative to its invested capital.
Conclusion
Overall, MongoDB Inc (MDB, Financial) appears modestly undervalued based on GuruFocus's valuation. The company's financial condition is fair, but its profitability is poor, and its growth is below average compared to industry peers. For a comprehensive understanding of MongoDB's financials, interested parties can review its 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.
