Docusign (DOCU) – the #1 e-signature solutions provider – reports 2Q22 earnings after the close Thursday. It’s no wonder that the stock is trading at 52 week lows after gapping down after each of its last three quarterly earnings reports. I have rarely seen a worse looking chart.
But DOCU now represents long term value and is due for a bounce. DOCU has lowered the bar significantly and is now guiding 2Q22 billings growth to only 1% and revenue growth to 18% year over year.
DOCU is still the leading e-signature solution in a secular growth industry as more and more business will continue to get done online. In addition it is a highly profitable company with $411 million in net income and $455 million in free cash flow in 2021. DOCU is currently guiding 2022 net income to $412 million which works out to $1.99 a share. At a current $55 that’s a 28x multiple which is more than reasonable given the long term growth prospects.
Any semblance of stabilization in the business should result in a nice bounce for DOCU. I’m holding my nose and going dumpster diving on this one.