DocuSign (DOCU) Stock Drops Despite Market Gains: Important Facts to Note

SurgePays, Inc. (SURG) came out with a quarterly loss of $0.73 per share versus the Zacks Consensus Estimate of a loss of $0.22. This compares to earnings of $0.49 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -231.82%. A quarter ago, it was expected that this company would post a loss of $0.17 per share when it actually produced a loss of $0.66, delivering a surprise of -288.24%.

Over the last four quarters, the company has not been able to surpass consensus EPS estimates.

SurgePays, Inc., which belongs to the Zacks Internet - Software industry, posted revenues of $4.77 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 44.79%. This compares to year-ago revenues of $34.16 million. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

SurgePays, Inc. Shares have lost about 74.4% since the beginning of the year versus the S&P 500's gain of 25.8%.

What's Next for SurgePays, Inc.

While SurgePays, Inc. Has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for SurgePays, Inc. Mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.19 on $10.66 million in revenues for the coming quarter and -$1.03 on $65.8 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 21% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, DocuSign (DOCU), has yet to report results for the quarter ended October 2024.

This provider of electronic signature technology is expected to post quarterly earnings of $0.86 per share in its upcoming report, which represents a year-over-year change of +8.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

DocuSign's revenues are expected to be $743.38 million, up 6.1% from the year-ago quarter.

Zacks Investment Research

BlackLine (BL) came out with quarterly earnings of $0.60 per share, beating the Zacks Consensus Estimate of $0.52 per share. This compares to earnings of $0.51 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 15.38%. A quarter ago, it was expected that this company would post earnings of $0.50 per share when it actually produced earnings of $0.58, delivering a surprise of 16%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

BlackLine, which belongs to the Zacks Internet - Software industry, posted revenues of $165.91 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.79%. This compares to year-ago revenues of $150.71 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

BlackLine shares have lost about 6.1% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for BlackLine?

While BlackLine has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for BlackLine: favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #1 (Strong Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.52 on $167.99 million in revenues for the coming quarter and $2.14 on $648.95 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

DocuSign (DOCU), another stock in the same industry, has yet to report results for the quarter ended October 2024.

This provider of electronic signature technology is expected to post quarterly earnings of $0.86 per share in its upcoming report, which represents a year-over-year change of +8.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

DocuSign's revenues are expected to be $743.38 million, up 6.1% from the year-ago quarter.

Zacks Investment Research

In the latest market close, DocuSign (DOCU) reached $76.47, with a +1.27% movement compared to the previous day. The stock exceeded the S&P 500, which registered a gain of 0.74% for the day.

Shares of the provider of electronic signature technology witnessed a gain of 9.04% over the previous month, beating the performance of the Computer and Technology sector with its gain of 3.99% and the S&P 500's gain of 3.16%.

Investors will be eagerly watching for the performance of DocuSign in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $0.86, marking an 8.86% rise compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $743.38 million, indicating a 6.13% increase compared to the same quarter of the previous year.

DOCU's full-year Zacks Consensus Estimates are calling for earnings of $3.45 per share and revenue of $2.94 billion. These results would represent year-over-year changes of +15.77% and +6.46%, respectively.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for DocuSign. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. DocuSign is currently a Zacks Rank #3 (Hold).

Looking at valuation, DocuSign is presently trading at a Forward P/E ratio of 21.87. This expresses a discount compared to the average Forward P/E of 32.9 of its industry.

Also, we should mention that DOCU has a PEG ratio of 2.34. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Software industry currently had an average PEG ratio of 2.44 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 63, finds itself in the top 25% echelons of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Zacks Investment Research

DocuSign (DOCU) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Over the past month, shares of this provider of electronic signature technology have returned +9%, compared to the Zacks S&P 500 composite's +3.2% change. During this period, the Zacks Internet - Software industry, which DocuSign falls in, has gained 1.9%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current quarter, DocuSign is expected to post earnings of $0.86 per share, indicating a change of +8.9% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The consensus earnings estimate of $3.45 for the current fiscal year indicates a year-over-year change of +15.8%. This estimate has remained unchanged over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $3.66 indicates a change of +5.9% from what DocuSign is expected to report a year ago. Over the past month, the estimate has changed -0.2%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for DocuSign.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue Growth

While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For DocuSign, the consensus sales estimate for the current quarter of $743.38 million indicates a year-over-year change of +6.1%. For the current and next fiscal years, $2.94 billion and $3.11 billion estimates indicate +6.5% and +5.9% changes, respectively.

Last Reported Results and Surprise History

DocuSign reported revenues of $736.03 million in the last reported quarter, representing a year-over-year change of +7%. EPS of $0.97 for the same period compares with $0.72 a year ago.

Compared to the Zacks Consensus Estimate of $726.15 million, the reported revenues represent a surprise of +1.36%. The EPS surprise was +21.25%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

DocuSign is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about DocuSign. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Zacks Investment Research

CS Disco (LAW) came out with a quarterly loss of $0.06 per share versus the Zacks Consensus Estimate of a loss of $0.09. This compares to loss of $0.06 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 33.33%. A quarter ago, it was expected that this legal technology company would post a loss of $0.09 per share when it actually produced a loss of $0.07, delivering a surprise of 22.22%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

CS Disco, which belongs to the Zacks Internet - Software industry, posted revenues of $36.27 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.04%. This compares to year-ago revenues of $34.94 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

CS Disco shares have lost about 20.2% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for CS Disco?

While CS Disco has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for CS Disco: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.08 on $36.99 million in revenues for the coming quarter and -$0.32 on $144.81 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 24% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, DocuSign (DOCU), is yet to report results for the quarter ended October 2024.

This provider of electronic signature technology is expected to post quarterly earnings of $0.86 per share in its upcoming report, which represents a year-over-year change of +8.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

DocuSign's revenues are expected to be $743.38 million, up 6.1% from the year-ago quarter.

Zacks Investment Research