DigitalOcean Holdings, Inc. (DOCN) stock analysis
Close on Nov 11, 2026Market cap $10.25BP/E 40.0Yield –
StockData Score
Prices as of Nov 11, 2026How the score works
Mixed12 of 30 checks passed
DigitalOcean passes 12 of the 30 checks behind our score; 10 could not be run for lack of data and count as not passed. Each dot in the shape is one check — hover it for the numbers.
- Valuation
- 2/6
- Growth
- 3/6
- Past performance
- 4/6
- Financial health
- 3/6
- Dividend
- 0/6
What stands out
Return on capital over 10%
Return on invested capital was 14.9%, above the 10% that usually covers the cost of capital.
Revenue growing 10%+ a year
Revenue grew 16.1% a year over the last three fiscal years.
Debt covered by cash flow
Operating cash flow over the last twelve months equals 33.7% of total debt.
Low bankruptcy risk
The Altman Z-score is 3.38; above 3 is the safe zone and below 1.8 the distress zone.
What to watch
Margin of safety under 20%
The price is 10.5% above fair value, so there is no margin of safety.
Trading above fair value
The share price of $87.15 is above our fair value estimate of $78.86.
High debt
Debt is 99.0% of shareholders' equity, above the 40% we consider low.
Interest not well covered
Operating income covers interest expense 4.8 times; we look for at least 5.
Valuation2/6
P/E below its 5-year median
DigitalOcean's P/E of 40.0 is below its own 5-year median of 44.8.
P/E above the industry
DigitalOcean's P/E of 40.0 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 27.6.
EV/EBITDA below its 5-year median
DigitalOcean's EV/EBITDA of 32.3 is below its 5-year median of 39.5.
P/B above the industry
DigitalOcean's price-to-book of 11.01 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 3.32.
Trading above fair value
The share price of $87.15 is above our fair value estimate of $78.86.
Margin of safety under 20%
The price is 10.5% above fair value, so there is no margin of safety.
Growth3/6
Revenue growing 10%+ a year
Revenue grew 16.1% a year over the last three fiscal years.
EPS growth over 3 years
Needs positive EPS three years ago and today.
Earnings acceleration
Needs positive net income now, a year ago and five years ago.
Growing faster than the industry
Revenue grew 21.4% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 9.6%.
Guidance raised
DigitalOcean raised its full year 2026 Total revenue outlook on Nov 3, 2026.
Gross margin slipping
Gross margin was 57.2% over the last twelve months, against 60.4% a year earlier.
Past performance4/6
Return on equity
Needs positive equity and five years of results.
Return on capital over 10%
Return on invested capital was 14.9%, above the 10% that usually covers the cost of capital.
Return on equity above the industry
DigitalOcean's return on equity of 62.3% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -1.2%.
Earnings over 5 years
Needs positive net income five years ago and in the latest year.
Net margin above its 5-year average
Net margin was 23.3% over the last twelve months, against a 5-year average of 6.6%.
Net margin above the industry
DigitalOcean's net margin of 23.3% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -4.8%.
Financial health3/6
High debt
Debt is 99.0% of shareholders' equity, above the 40% we consider low.
Debt trend
Needs a balance sheet from five years ago with positive equity.
Debt covered by cash flow
Operating cash flow over the last twelve months equals 33.7% of total debt.
Interest not well covered
Operating income covers interest expense 4.8 times; we look for at least 5.
Short-term assets cover short-term debts
Current assets are 1.31 times current liabilities.
Low bankruptcy risk
The Altman Z-score is 3.38; above 3 is the safe zone and below 1.8 the distress zone.
Dividend0/6
No dividend
DigitalOcean has not paid a dividend in the last twelve months.
Yield against Treasuries
No dividend.
Yield against the market
No dividend.
Dividend stability
No dividend.
Earnings cover
No dividend.
Cash-flow cover
No dividend.
Fair value
How we estimate itOur estimate per share
$78.86
The share price is 11% above this estimate.
| Method | Multiple used | Own 5Y median | Industry median | Value per share | Weight |
|---|---|---|---|---|---|
| P/E | 36.3× | 44.8× | 27.6× | $79.04 | 53% |
| EV/EBITDA | 29.2× | 39.5× | 18.8× | $78.66 | 47% |
| Earnings powerleft out, too far from the others | 14.9% cost of equity | – | – | $8.58 | – |
| Fair value | $78.86 | 100% | |||
Valuation over time
Using the earnings and balance sheet published at each date, not today's.
- P/E at month end
- Own 5-year median 44.8
- Computer Programming, Data Processing, and Other Computer Related Services median 27.6
An estimate from reported numbers and market multiples, not a price target or investment advice. It can be far off for companies whose profits are about to change sharply.
Market risk
From the past year of daily prices.
Liquidity
Low risk
- Average value traded per day
- $339.73M
- Value traded per 1% price move
- $72.14M
Downside
High risk
- Typical loss in a bad month
- 37.1%
- Volatility (annualized)
- 89%
- Sharpe ratio, 1 year
- 0.72
- Beta to the S&P 500 (5Y)
- 2.12
Typical bad-month loss, week by week
Margins
Share of revenue, fiscal years 2018 to 2025
Gross margin
Operating margin
Net margin
Growth rates
Compound annual growth to fiscal 2025
| Per year | 1 year | 3 years | 5 years | 10 years | Five-year pace |
|---|---|---|---|---|---|
| Revenue | +15.5% | +16.1% | +23.1% | – | |
| Gross profit | +15.8% | +14.0% | +25.6% | – | |
| Operating income | +72.5% | – | – | – | |
| Net income | +206.8% | – | – | – | |
| EPS, diluted | +183.1% | – | – | – | |
| Free cash flow | +72.6% | +26.7% | – | – |
Returns and balance sheet
8 fiscal years. Hover a measure to see how it is calculated.
| Measure | FY2018 | FY2020 | FY2025 | Trend |
|---|---|---|---|---|
| Return on equity | – | 60.4% | -223.8% | |
| Return on assets | – | – | 14.9% | |
| Current ratio | – | 1.75 | 0.69 | |
| Debt to equity | – | -3.60 | -45.16 | |
| Net debt to EBITDA | – | 2.63× | 3.54× | |
| Interest coverage | – | -1.2× | 8.8× | |
| Capex to revenue | – | 30.9% | 14.3% | |
| Diluted shares | – | 42M | 105M |
Where the cash went
Fiscal 2021 to 2025, five years combined
DigitalOcean generated $1.16B from operations and spent $2.21B on capital expenditure, dividends and share buybacks. 29% of that went back into the business.
DuPont analysis
Return on equity split into margin, efficiency and leverage
| Fiscal year | Net margin | Asset turnover | Equity multiplier | Return on equity |
|---|---|---|---|---|
| FY2025 | 28.8% | 0.52× | -15.01× | -223.8% |
| FY2024 | 10.8% | 0.50× | -6.00× | -32.7% |
| FY2023 | 2.8% | 0.42× | -12.31× | -14.6% |
| FY2022 | -4.8% | 0.29× | 6.26× | -8.9% |
| FY2021 | -4.6% | 0.34× | 5.00× | -7.7% |
Piotroski F-Score
Nine tests of profitability, balance sheet and efficiency, fiscal 2025 against fiscal 2024
- ProfitableNet income above zero$259.26M
- Cash generatingOperating cash flow above zero$309.60M
- Return on assets improvedROA up on the prior year5.8% → 15.8%
- Earnings backed by cashOperating cash flow above net income$309.60M vs $259.26M
- Less leverageLong-term debt to assets fell90.6% → 52.8%
- Better liquidityCurrent ratio rose2.45 → 0.69
- No dilutionShare count did not rise95M → 105M
- Gross margin improvedGross margin up on the prior year59.69% → 59.86%
- More efficientAsset turnover rose0.53 → 0.55
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