Doximity Inc. (DOCS) — Undervalued With Compelling Growth Factors
As of April 2023, Doximity shares had a 50-day average price of $22.27. Doximity, Inc. operates a cloud-based digital platform for medical professionals in the United States. Based in San Francisco, CA, the mid-cap Technology company has 977 full time employees. Doximity has not offered a dividend during the last year.
Wider Gross Margins Than the Industry Average of 23.25%:
| 2021 | 2022 | 2023 | |
|---|---|---|---|
| Revenue (k) | $206,897 | $343,548 | $419,052 |
| Revenue Growth | n/a | 66.05% | 21.98% |
| Gross Margins | 41% | 45% | 43% |
| Net Margins | 24% | 45% | 27% |
| Net Income (k) | $50,210 | $154,783 | $112,818 |
| Net Interest Expense (k) | $4,466 | $469 | $8,048 |
| Depreciation & Amort. (k) | $3,702 | $5,040 | $10,283 |
| Earnings Per Share | $0.23 | $0.7 | $0.53 |
| EPS Growth | n/a | 204.35% | -24.29% |
| Diluted Shares (k) | 95,134 | 191,017 | 213,425 |
| Free Cash Flow (k) | $82,728 | $124,663 | $177,901 |
| Capital Expenditures | $245 | $1,912 | $1,701 |
| Current Ratio | 9.36 | 8.49 | 7.0 |
| Long Term Debt (k) | $0 | $27,907 | $20,833 |
| LT Debt to Equity | 0.0 | 0.03 | 0.02 |
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Doximity has a trailing twelve month P/E ratio of 38.4, compared to an average of 35.0 for the Technology sector. Based on its EPS guidance of $0.89, the company has a forward P/E ratio of 25.0. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 3 years of reported EPS is 32.1%. On this basis, Doximity's PEG ratio is 1.2. Using instead the 10.9% weighted average of Doximity's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 3.53, which suggests that its shares may be overpriced. In contrast, the market is likely undervaluing Doximity in terms of its equity because its P/B ratio is 5.27 while the sector average is 7.92. The company's shares are currently trading 233.6% above their Graham number.
Doximity Has an Average Rating of Hold:
The 11 analysts following Doximity have set target prices ranging from $21.0 to $31.0 per share, for an average of $26.27 with a hold rating. As of April 2023, the company is trading -15.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Doximity has an above average percentage of its shares sold short because 10.8% of the company's shares are sold short. Institutions own 88.8% of the company's shares, and the insider ownership rate stands at 2.54%, suggesting a decent amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 6% stake in the company is worth $268,786,870.
