Datadog, Inc. (DDOG)

FairStock Score: 35/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for a business I can understand, run by able people, at a price that leaves room for error. Datadog sells observability and security software for cloud applications. The business is clearly growing: revenue growth was 35.64% by FairStock's measure, and in fiscal Q2 2026, the quarter ended 2026-06-30, it reported revenue of $1.1B, net income of $44.6M, and diluted EPS of $0.12. That is a sharp turn from fiscal Q2 2025, the quarter ended 2025-06-30, when net income was just $2.6M and diluted EPS $0.01. Trailing free cash flow is $1.1B, debt-to-equity is only 0.29, and the Altman Z-Score of 20.68 suggests a sturdy balance sheet. Those are marks of a real business with improving cash generation, though I cannot verify the moat's durability from these figures alone. But Graham would choke on the price. At the 2026-10-13 close of $283.34, the FairStock-calculated P/E is 555.57, P/B is 23.28, EV/EBITDA is 376.18, and FCF yield is 1.0%. The Graham Number is $11.82, leaving a margin of safety of roughly negative 2,297%. ROE is 4.70% and ROCE is 0.18%, so the accounting returns do not yet justify the multiple. Profits are also uneven: FY2025, ended 2025-12-31, net income was $107.7M, down from $183.7M in FY2024. The company may be a fine enterprise, but the shares discount years of exceptional execution. I prefer to wait for the numbers—not the story—to catch up with the price.

In plain English: Datadog helps companies watch and protect their cloud software. Sales are growing quickly and the company is now profitable, but profits are still thin and the shares look very expensive compared with those profits and the company's accounting value. It looks like a high-growth business priced for a lot of future success.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer