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DigitalOcean Holdings, Inc. (DOCN) Stock Sinks As Market Gains: What You Should Know

In the latest trading session, DigitalOcean Holdings, Inc. (DOCN) closed at $38.90, marking a -0.66% move from the previous day. This change lagged the S&P 500's 0.13% gain on the day. At the same time, the Dow added 0.28%, and the tech-heavy Nasdaq lost 0.04%.

Prior to today's trading, shares of the company had lost 17.99% over the past month. This has lagged the Computer and Technology sector's loss of 13.84% and the S&P 500's gain of 5.55% in that time.

Wall Street will be looking for positivity from DigitalOcean Holdings, Inc. as it approaches its next earnings report date. This is expected to be August 8, 2022. In that report, analysts expect DigitalOcean Holdings, Inc. to post earnings of $0.10 per share. This would mark year-over-year growth of 42.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $134.64 million, up 29.69% from the year-ago period.

DOCN's full-year Zacks Consensus Estimates are calling for earnings of $0.69 per share and revenue of $570.22 million. These results would represent year-over-year changes of +102.94% and +33.05%, respectively.

It is also important to note the recent changes to analyst estimates for DigitalOcean Holdings, Inc.These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 64.29% higher within the past month. DigitalOcean Holdings, Inc. currently has a Zacks Rank of #2 (Buy).

In terms of valuation, DigitalOcean Holdings, Inc. is currently trading at a Forward P/E ratio of 56.87. This represents a premium compared to its industry's average Forward P/E of 44.14.

Investors should also note that DOCN has a PEG ratio of 0.97 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 2.54 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 136, putting it in the bottom 47% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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