Docusign Declines 23% in 6 Months: Should You Buy the Stock Right Now?

Core Insights - Docusign, Inc. (DOCU) shares have declined 23.1% over the past six months, contrasting with a 1.1% growth in the industry and a 19.5% rally in the Zacks S&P 500 composite [1] - Recently, DOCU shares have increased by 1.5% in the past month, indicating a potential end to the correction phase [4] Company Performance - Docusign has partnered with Microsoft and Salesforce to enhance its Intelligent Agreement Management (IAM) platform, improving integration capabilities and optimizing agreement workflows [5][6] - The integration with Microsoft 365 and Salesforce's CRM suite simplifies contract processes, enhancing decision-making and collaboration among legal, sales, and procurement teams [6][9] - IAM has evolved beyond an e-signature solution to a comprehensive digital agreement hub, facilitating swift document movement through automated workflows [7] Valuation and Returns - Docusign's stock is currently priced at 17.44 times forward 12-month price-to-earnings, significantly below the industry average of 34.09 times, suggesting potential undervaluation [10] - The company's return on equity stands at 38%, surpassing the industry's 33.4%, indicating effective capital utilization and enhancing competitive edge [12][14] Financial Outlook - The Zacks Consensus Estimate for DOCU's fiscal 2026 revenues is $3.2 billion, reflecting a 7.3% year-over-year growth, with fiscal 2027 anticipated to grow by 3.9% [16] - The consensus estimate for fiscal 2026 EPS is $3.69, indicating a 3.9% year-over-year growth, with a projected 9.9% growth for 2027 [16][17] Investment Recommendation - Despite recent share price weakness, the stock is recommended for purchase as it has ended its correction phase and is expected to rise in the long term [18] - The collaboration with tech giants is expected to strengthen customer relationships and provide a competitive edge in the software-as-a-service landscape [9][19]