Assessing Datadog (DDOG) Valuation After Recent Share Price Weakness And Growth In Revenue And Profit

Simply Wall St.02-23 07:27

AdvertisementWhy Datadog’s recent returns may have investors reassessing the stock Datadog (DDOG) has lagged recently, with the share price showing a 4.1% decline over the past day and deeper negative...

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This gives investors concrete financial figures to weigh against recent price moves.\nSee...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"DDOG":"Datadog"},"translate_title":"在近期股价疲软以及收入和利润增长后评估Datadog(DDOG)的估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DDOG":1.5},"content_text":"AdvertisementWhy Datadog’s recent returns may have investors reassessing the stock Datadog (DDOG) has lagged recently, with the share price showing a 4.1% decline over the past day and deeper negative returns over the past week, month, and past 3 months. At the same time, the company reports annual revenue of US$3.43b and net income of US$107.74m, with both revenue and net income growth reported on an annual basis. This gives investors concrete financial figures to weigh against recent price moves. See our latest analysis for Datadog. That recent 4.1% one day share price decline to US$115.66 comes on top of weaker momentum over the past quarter. The 1 year total shareholder return of a 3.33% decline contrasts with a still positive 3 year total shareholder return of 50.85%, hinting that sentiment has cooled after a stronger multi year run. If Datadog’s pullback has you scanning the broader cloud and software space, it could be a good time to see what else is out there among 34 AI infrastructure stocks as another way to look for opportunity. With Datadog shares down over the past year, but revenue at US$3.43b and net income at US$107.74m, the key question is whether today’s price reflects a bargain or if the market is already assigning value to potential future growth. Most Popular Narrative: 44.5% Undervalued Datadog’s most followed narrative points to a fair value of about $208.49 per share, well above the last close at $115.66. This sets up a clear valuation gap for investors to assess.  Ongoing product innovation (e.g., autonomous AI agents, enhanced security modules, expanded log and data observability) is increasing platform breadth and relevance, providing cross-selling opportunities and driving higher average revenue per user and net retention rate, which in turn improves recurring revenue predictability and gross margins.  Read the complete narrative. Curious how this product expansion translates into that higher fair value estimate? The narrative refers to compounded revenue gains, firmer margins, and a rich future profit multiple tied to Datadog’s role in AI heavy workloads. The exact path, and the trade off it assumes, only becomes clear when you see the full set of projections behind that $208.49 figure. Result: Fair Value of $208.49 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, you also need to weigh risks like pricing pressure from rivals such as Chronosphere and rising operating costs, which could squeeze margins if growth slows. Find out about the key risks to this Datadog narrative. Another View: High P/S Puts Pressure On The Undervaluation Story Those fair value estimates of about $208 per share line up with our own model, which suggests Datadog is trading 35.8% below its estimated future cash flow value of $180.29. But the market is also saying something else when you look at the P/S ratio. Datadog trades on a P/S of 11.9x, compared with 3.5x for the wider US Software group and 7.7x for peers, while its fair ratio is 11.2x. That gap points to a rich current pricing multiple even with a DCF signal of undervaluation. The key question is which story matters more for you right now. See what the numbers say about this price — find out in our valuation breakdown. NasdaqGS:DDOG P/S Ratio as at Feb 2026Next Steps If this combination of upside potential and real concerns leaves you undecided, it may be worth acting promptly and reviewing the full picture for yourself with 2 key rewards and 2 important warning signs. Ready to scout your next ideas? If Datadog is on your radar, do not stop there. A few minutes in the screener can surface fresh names you might regret missing later.  Target stability first by checking companies screened for resilient balance sheets and earnings quality through our solid balance sheet and fundamentals stocks screener (43 results). Hunt for potential value opportunities by reviewing our 54 high quality undervalued stocks, built to highlight companies with strong fundamentals at compressed prices. Prioritize resilience by scanning our 87 resilient stocks with low risk scores, focusing on businesses with lower risk scores that may better match a cautious approach.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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