What changed
$DOCU — BUY 📊 | 6 MONTHS THESIS
🧭 Conviction: HIGH
🎯 FQ1 FY2027 (ends Apr) | reported Jun 04 | Rev $830M | EPS $1.09 vs $0.99 🟢 | Margin 13.4%
💡 Consensus estimates were too low, and even after the beat, forward expectations likely remain subdued due to overfocus on SBC dilution. Real FCF generation is strong after buybacks, and margins are expanding (13.4% operating margin, up from 7.9% in the prior year).
📉 Reward/risk: 2.1:1
🏢 Business Quality: 7 — Sticky enterprise e-signature platform with 79% gross margins and high renewal rates, but faces competition from Adobe Sign and growth deceleration risk./10
📊 Valuation: cheap — Trailing P/E 10.4x vs sector median ~25x; EV/EBIT ~18x but drops to ~12x when normalizing for SBC-adjusted FCF; FCF yield 13.4% unadjusted,...
🔮 Catalyst: Next quarterly earnings release (est. September 2026)
💰 Entry: $45.21, stop $40.0, target $56.0
⚖️ Buy: DOCU trades at 10x trailing earnings after a strong beat, with high FCF yield when adjusting for