On Friday, DocuSign Inc. (NASDAQ:DOCU) shares spiked more than 5% after Thursday’s release of its market-beating quarterly results. The company announced its fiscal Q2 revenue and earnings after markets closed, outperforming analyst expectations.
DocuSign posted Q2 non-GAAP earnings per share of $0.47, beating the consensus Street estimate of $0.40. However, its GAAP EPS of -$0.13 missed the expectations by $0.04. On the other hand, revenue for the quarter soared 49.6% to $511.84 million, $23.85 million better than the average of analyst expectations.
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Moreover, the company issued fiscal Q3 revenue guidance in the range of $526 million to $532 million compared to Street estimates of $520.93 million. In addition, its full-year 2022 topline guidance of $2.078 billion to $2.088 billion came in better than the consensus forecast of $2.05 billion.
Should you bet on DocuSign growth against a steep valuation?
DocuSign shares trade at a steep forward P/E ratio of 134.08 and a P/B of 235.66, indicating an expensive valuation. Therefore, value investors could opt for alternatives in the short term.
However, the company seems poised for significant growth in the coming years based on its average annual earnings growth forecast of about 56% for the next five years.
The company CEO Dan Springer told CNBC that DocuSign has years of high growth ahead, backed by its growing Q2 free cash flows of $161.7 million compared to $99.8 million in the prior year.
Therefore, growth investors could find DocuSign shares compelling ahead of the company’s exciting growth story.
Source – TradingView
Can DocuSign stock price rebound continue?
Technically, DocuSign shares seem to be trading within an ascending channel formation in the intraday chart. However, the stock is yet to hit the overbought conditions of the 14-day RSI and is still far off below the trendline resistance.
Therefore, investors can target extended rebound profits at approximately $325.03 or higher at $340.37, while $296.32 and $280.89 are crucial support levels.
Bottom line: Why buy DocuSign shares in September 2021?
In summary, although DocuSign shares seem steeply-priced at the current forward P/E, the stock is yet to hit overbought conditions after Friday’s rebound. Moreover, DocuSign offers exciting growth potential in the long term, thereby gaining the attention of growth investors.
As a result, with the DOCU share price up about 28% over the last 12 months, it may not be too late to buy the stock.
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