If you’re not familiar with DocuSign (NASDAQ:DOCU) then you’ve missed out on some huge returns in 2020. The San Francisco-based electronic signature company is up 98% year to date, and I think DocuSign stock is raring to go even higher.
In fact, I recently named DocuSign as one of the best large-cap stocks you can buy right now.
But what makes DocuSign such a good investment? And what can investors expect when the company reports fiscal first-quarter earnings on June 4?
Let’s take a look at both of those questions now.
DocuSign Is More Than a Coronavirus Stock
It’s natural to think of DocuSign as a play on the novel coronavirus. The pandemic forced people to work from home for weeks, but important business still had to be done.
DOCU helps companies gather legally binding signatures on documents without face-to-face meetings or business travel. It allows people to sign official documents and validates the signature by having users scan in their driver’s license or another official photo ID.
That’s been important as the globe wrestles with the Covid-19 pandemic, and it’s going to remain a key selling point for DocuSign stock for the foreseeable future.
DocuSign already works with more than 1,300 local, state and federal agencies across the country to record official signatures, and it earned U.S. FedRAMP authorization for moderate level security, which allows its e-signature program to be used on 80% of all federal documents.
But that just scratches the surface of DocuSign’s potential.
One of the biggest drivers has been the DocuSign Agreement Cloud, which is a cloud-based suite that has more than a dozen different apps to help handle e-signatures, document generation and contract management.
The cloud is also integrated with other applications offered by giants in the tech space, including Salesforce (NYSE:CRM), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).
Uber (NYSE:UBER) is one of the more prominent users of DocuSign’s contract management platform. Uber Eats uses DOCU’s platform to create and handle thousands of contracts with restaurants around the country.
And then there’s artificial intelligence. DocuSign is quickly becoming an AI play with its February 2020 acquisition of Seal Software. The two companies worked closely together since 2018 as DocuSign marketed Seal’s flagship product as DocuSign Intelligent Insights to help users compare and search through legal documents.
The software can also offer actionable insights and make recommendations about risks.
DocuSign Stock Earnings Preview
DocuSign has seen outstanding growth in recent quarters. Revenue has nearly quadrupled in the last four years, growing from $250 million in 2016 to $974 million last year.
DOCU is expected to issue earnings on June 4, when analysts are projecting revenues of $284 million, which would be an increase of 32.7% from a year ago. Earnings per share are expected at 11 cents, which would mark a 57% increase from last year.
That would also continue DocuSign’s strong string of positive earnings. In the most recent quarter, DOCU’s adjusted earnings were up 12 cents. That’s a 100% increase from the year-ago quarter. Revenue of $274.9 million was up 38% on a year-over-year basis.
The Bottom Line on DOCU Stock
DocuSign has done an outstanding job of getting people to use its products. It currently has 500,000 paying customers, who provide great stability to the company. Consumers in 180 countries around the world use its products.
DocuSign is a leader in electronic signatures, is a burgeoning AI stock and has a growing customer base. With a market capitalization of $27 billion and impressive growth, it offers both strong returns and stability to any portfolio.
DOCU stock is a strong buy in my Portfolio Grader, where it has an A grade right now.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.