Complete DOCN Stock Valuation Analysis
Comprehensive intrinsic value analysis using 5 different methodologies
DOCN DCF Analysis
DOCN (DigitalOcean Holdings, Inc.) discounted cash flow analysis with multiple scenarios, growth assumptions, and terminal value calculations
Financial Projections
| Metrics | 2022 (Historical) | 2023 (Historical) | 2024 (Historical) | 2025 (Projected) | 2026 (Projected) | 2027 (Projected) | 2028 (Projected) | 2029 (Projected) |
|---|---|---|---|---|---|---|---|---|
| Revenue | $576.3M | $692.9M | $780.6M | $948.4M | $1.1B | $1.3B | $1.5B | $1.8B |
| Revenue Growth % | - | 20.2% | 12.7% | 21.5% | 19.3% | 17.4% | 15.7% | 14.1% |
| EBIT | $-15.6M | $11.9M | $91.0M | $47.4M | $56.6M | $66.4M | $76.8M | $87.7M |
| EBIT Margin % | -2.7% | 1.7% | 11.7% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% |
| Tax Rate % | 25.0% | 27.5% | 13.5% | 23.2% | 23.4% | 23.6% | 23.7% | 23.9% |
| NOPAT | $-11.7M | $8.6M | $78.7M | $36.4M | $43.4M | $50.8M | $58.6M | $66.7M |
| NOPAT Margin % | -2.0% | 1.2% | 10.1% | 3.8% | 3.8% | 3.8% | 3.8% | 3.8% |
| Capex | $120.2M | $124.8M | $186.5M | $170.8M | $193.7M | $216.0M | $237.4M | $257.3M |
| Capex / Revenue % | 20.9% | 18.0% | 23.9% | 18.0% | 17.1% | 16.3% | 15.4% | 14.7% |
| Depreciation | $102.2M | $117.9M | $130.1M | $162.5M | $193.9M | $227.7M | $263.4M | $300.5M |
| D&A / Revenue % | 17.7% | 17.0% | 16.7% | 17.1% | 17.1% | 17.1% | 17.1% | 17.1% |
| Change in NWC | $-929.5M | $-471.9M | $10.4M | $6.3M | $6.0M | $5.7M | $5.2M | $4.8M |
| NWC Change / Revenue % | -161.3% | -68.1% | 1.3% | 0.7% | 0.5% | 0.4% | 0.3% | 0.3% |
| Unlevered FCF | $899.8M | $473.6M | $11.8M | $21.8M | $37.6M | $56.8M | $79.4M | $105.1M |
| UFCF % Chg. | - | -47.4% | -97.5% | 84.2% | 72.6% | 51.1% | 39.7% | 32.5% |
| FCF / Revenue % | 156.1% | 68.4% | 1.5% | 2.3% | 3.3% | 4.3% | 5.2% | 6.0% |
| Discount Factor | - | - | - | 0.919 | 0.844 | 0.775 | 0.712 | 0.654 |
| Present Value of FCF | - | - | - | $20.0M | $31.7M | $44.0M | $56.5M | $68.8M |
| Sum of PV of UFCF | - | - | - | $20.0M | $51.7M | $95.8M | $152.3M | $221.1M |
WACC Calculation
Weighted Average Cost of Capital used for discounting cash flows.
| WACC Calculation | Value |
|---|---|
| Cost of Debt | 5.9% |
| Tax Rate | 23.2% |
| After Tax Cost of Debt | 4.5% |
| Risk Free Rate | 4.37% |
| Market Risk Premium | 4.3% |
| Beta | 1.76 |
| Cost of Equity | 12.0% |
| Total Debt | $1.7B |
| Market Cap | $2.4B |
| Total Capital | $4.0B |
| Debt Weighting | 41.9% |
| Equity Weighting | 58.1% |
| WACC | 8.9% |
Terminal Value
Choose between perpetuity growth or exit multiple methods.
| Terminal Value Calculation | Value |
|---|---|
| Terminal Growth Rate | 2.5% |
| Final Year FCF | $105.1M |
| Terminal Value | $1.7B |
| PV of Terminal Value | $1.1B |
| Cumulative PV of UFCF | $221.1M |
| Net Debt | $1.3B |
| Equity Value | $64.2M |
| Shares Outstanding | 94.5M |
| Implied Share Price | $1 |
| Current Share Price | $26 |
| Implied Upside/(Downside) | -97.4% |
Valuation Summary
$0.68
Implied Price
$25.86
Current Price
-97.4%
Upside/Downside
8.9%
WACC
DOCN Peer Valuation Analysis
Relative valuation based on comparable company trading multiples
Peer Valuation Analysis
Fair Value Range Analysis
Based on median multiples from 9 peer companies in Technology
P/E Ratio
$26.33
+1.8%
Peer Median: 24.8x
EV/EBITDA
$39.77
+53.8%
Peer Median: 13.9x
P/S Ratio
$35.61
+37.7%
Peer Median: 4.0x
Interpretation: Each multiple provides a different perspective on fair value. Consider which multiple is most relevant for DOCN's business model and current situation.
Multiple Comparison
| Multiple | DOCN Current | Peer Median | Peer Average | Premium/Discount | Assessment |
|---|---|---|---|---|---|
| P/E Ratio | 24.4x | 24.8x | 24.6x | -1.8% | Fair Value |
| EV/EBITDA | 13.9x | 13.9x | 12.8x | 0.0% | Fair Value |
| P/S Ratio | 2.9x | 4.0x | 6.8x | -27.4% | Undervalued |
Peer Companies
Click any company to view their valuation
| Company | Market Cap | P/E Ratio | EV/EBITDA | P/S Ratio |
|---|---|---|---|---|
| $18.42B | 0.0x | 87.5x | 4.0x | |
| $17.92B | 0.0x | 0.0x | 8.9x | |
| $10.87B | 24.8x | 11.8x | 2.7x | |
| $2.35B | 24.4x | 13.9x | 2.9x | |
| $3.22B | 0.0x | 115.6x | 14.6x | |
| $0.92B | 0.0x | 0.0x | 1.7x | |
| $1.34B | 0.0x | 0.0x | 6.4x | |
| $0.38B | 0.0x | 0.0x | 1.1x | |
| $67.95B | 0.0x | 0.0x | 18.7x |
DOCN Graham Intrinsic Value
Growth-adjusted intrinsic value with two formula variants
Formula Selection
V = EPS × (8.5 + 2g)
Graham's original P/E shortcut for growth, no interest-rate adjustment
V = [EPS × (8.5 + 2g) × 4.4] / Y
Graham's 1974 refinement: adds rate-environment sensitivity
Active Formula: Base-Growth
1.06 × (8.5 + 2 × 8.0%)
Input Data & Growth Assumptions
Current EPS (TTM)$1.06
Latest 10-K • 2024-12-31T00:00:00
No positive historical growth rates available.
Graham's formula is designed for growing companies. Use the custom input below with a conservative positive growth estimate (5-10%).
Custom
%
Enter a positive growth rate estimate (0-50%)
Graham Intrinsic Value Result
$25.99
Intrinsic Value
$25.86
Current Price
+0.5%
Upside/Downside
Base Formula
Growth: 8.0%
DOCN Peter Lynch Fair Value
Growth-based valuation using PEG ratio analysis for growth stocks
Fair Value Calculation
EPS (TTM)$1.06
Latest 10-K • 2024-12-31T00:00:00
No positive historical growth rates available. Using custom growth rate slider.
10.0%
1%50%
Fair Value Formula: EPS × Growth Rate
$1.06 × 10.0% = $10.61
$10.61
Fair Value
$25.86
Current Price
-59.0%
Upside/Downside
PEG Analysis
24.4x
Current P/E
10.0%
Growth Rate
2.44
PEG Ratio (P/E ÷ Growth Rate)
Significantly Overvalued
PEG Ratio Interpretation:
• PEG < 1.0: Undervalued (growth exceeds P/E)
• PEG = 1.0: Fairly valued (ideal Lynch ratio)
• PEG > 1.5: Overvalued (paying premium for growth)
Peter Lynch's Rule:
"The P/E ratio of any company that's fairly priced will equal its growth rate." A stock with 15% growth should trade at a P/E of 15 (PEG = 1.0).
DOCN Earnings Power Value (EPV)
Normalized earnings-based valuation for sustainable earning power assessment
Earnings Normalization
| Earnings Component | Amount ($B) | Description |
|---|---|---|
| Reported Earnings | 0.1 | Base earnings from financial statements |
| Normalized Earnings | 0.1 | Final normalized earning power |
One-time Items: Remove non-recurring gains/losses
Cyclical Adjustment: Normalize for economic cycle position
EPV Result
$13.10
EPV per Share
$25.86
Current Price
-49.3%
Upside/Downside
6.8%
WACC: 6.8% (calculated from market data)
Confidence: High
Normalized earnings approach
EPV Calculation Breakdown
Enterprise Value Calculation
| Normalized Earnings | $0.1B |
| Cost of Capital | 6.8% |
| Enterprise Value | $1.2B |
Per Share Value
| Enterprise Value | $1.2B |
| Shares Outstanding | 0.1B |
| EPV per Share | $13.10 |
WACC Components
| Cost of Equity | 9.1% |
| After-Tax Cost of Debt | 3.5% |
| Equity Weight | 59.0% |
| Debt Weight | 41.0% |
| WACC | 6.8% |