DigitalOcean Holdings Inc. Common Stock (DOCN)

FairStock Score: 54/100 — MIXED

Key Financials

AI Analysis

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

I look for understandable businesses with durable advantages and conservative balance sheets. DigitalOcean sells cloud infrastructure and an inference platform to developers and smaller digital-native firms. Revenue has been moving: in fiscal Q2 2026 (the quarter ended 2026-06-30), revenue was $281.2M and net income $35.4M, or $0.29 diluted EPS. That is a sequential rise from fiscal Q1 2026 (the quarter ended 2026-03-31) revenue of $257.9M and net income $15.8M, but year-over-year profit was lower than fiscal Q2 2025 (the quarter ended 2025-06-30), when net income was $37.0M and diluted EPS $0.39. Full fiscal 2025 (ended 2025-12-31) revenue was $901.4M and net income $259.3M, up from fiscal 2024 revenue $780.6M and net income $84.5M, though the latest quarterly margin of 12.6% is thinner. The business is capital intensive and competitive: Alphabet, Microsoft, Amazon and others cast long shadows. FairStock labels it a TURNAROUND because it returned to profit after a loss within the last three years and scores it 54/100. Financial health is mixed: Altman Z-Score 4.34 suggests low bankruptcy risk, but debt/equity is 2.13 and trailing free cash flow is -$3.8M. Return on equity is 62.27%, yet ROCE is only 3.86%, so leverage flatters equity returns. At the 2026-10-13 close of $128.21, the P/E is 58.28, P/B 14.47, EV/EBITDA 41.89, and Graham Number $20.94, implying a -512.27% margin of safety. Price is speculation on future AI/inference growth, not Graham-style value. I would need consistent cash generation and a wider moat before calling it cheap.

In plain English: DigitalOcean provides cloud computing and AI infrastructure for developers and smaller technology companies. The business is growing revenue and is profitable, but profits have been uneven and it used more cash than it generated over the past year. At the recent price, the shares look expensive compared with the company's earnings, assets, and cash flow.

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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