Could DoubleVerify Stock’s Cash Flow Spark the Next Rally?
Here is why we think DoubleVerify (DV) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Let’s see the numbers.
- Cash Yield: DoubleVerify offers an impressive cash flow yield of 8.2%.
- Growing: Last 12 month revenue growth of 16.5% means that the cash pile is going to grow.
- Valuation Discount: DV stock is currently trading at 26% below 3-month high, 48% below 1-year high, and 72% below 2-year high.
Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, DoubleVerify provides a software platform delivering unbiased digital media measurement, analytics, fraud detection, brand safety, and revenue optimization solutions for advertisers and digital publishers.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.
| DV | S&P Median | |
|---|---|---|
| Sector | Communication Services | – |
| Industry | Advertising | – |
| Free Cash Flow Yield | 8.2% | 3.9% |
| Revenue Growth LTM | 16.5% | 5.2% |
| Operating Margin LTM | 11.9% | 18.6% |
| PS Ratio | 2.6 | 3.2 |
| PE Ratio | 34.8 | 24.2 |
| Discount vs 3-Month High | -26.4% | -5.0% |
| Discount vs 1-Year High | -48.1% | -9.7% |
| Discount vs 2-Year High | -71.8% | -11.4% |
But do these numbers tell the full story? Read Buy or Sell DV Stock to see if DoubleVerify still has an edge that holds up under the hood.
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The Point? The Market Can Notice, And Reward
The below statistics are from “high FCF yield at with growth and discount” selection strategy since 12/31/2016. The stats are calculated based on selections made monthly, and assuming that a stock once picked, can not be re-picked for next 180 days.
- Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
- Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
But Consider The Risk
That said, even solid stocks like DV aren’t immune to big drops. During the 2022 inflation shock, it fell about 61%. It shows that despite strong fundamentals or favorable conditions, risk is still there when markets turn. Even companies that seem stable can face sharp declines in tough times.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read DV Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.