DraftKings Inc. Class A Common Stock (DKNG)

FairStock Score: 32/100 — RISKY

Key Financials

Strengths

• Generates $603 million in annual free cash flow (5.5% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Revenue growth of 42.8% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($2) with negative 1277% margin of safety—limited downside protection
• High leverage at 3.17x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of 0.3 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

DraftKings Inc. Class A Common Stock is a mid-cap consumer cyclical company valued at $11.0 billion. The business generates $6.3 billion in annual revenue with a 2.2% net margin and $603 million in free cash flow. From a quality standpoint, DraftKings shows solid Piotroski F-Score of 7/9 and distressed Altman Z-Score of 0.3 warrants caution. On valuation, the stock is commanding a steep 273.4x multiple, with trades far above its Graham Number ($2) with no margin of safety. Growth dynamics show revenue growing at 42.8% and profit growth of 201.2%. Our composite FairStock Score of 32/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

DraftKings's 43% revenue growth trajectory could accelerate as it captures additional market share in the consumer cyclical sector. With $603 million in annual free cash flow (5.5% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 273x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer