GDS Holdings Ltd (GDS, Financial) has experienced a significant uptick in its stock price, with a 22.78% gain over the past week and an impressive 34.49% gain over the past three months. The company's market capitalization now stands at $1.54 billion, with the current stock price at $8.16. Despite these gains, the GF Value suggests a valuation of $34.19, indicating that the stock might be a possible value trap, a sentiment that has remained unchanged from the past GF Value of $33.24. Investors are advised to think twice before making an investment decision based on these figures.
Overview of GDS Holdings Ltd
GDS Holdings Ltd, operating in the software industry, has transitioned from IT services to a focus on data center operations. Since opening its first self-developed data center in 2010, GDS has expanded its footprint, primarily serving hyperscale cloud service customers through long-term contracts. The company's aggressive capital raising over the past four years has fueled its expansion, with data centers located mainly in Tier 1 cities in China and a growing presence in Southeast Asia. GDS went public on the NASDAQ in 2016 and completed a secondary listing in Hong Kong in 2020.
Assessing GDS's Profitability
With a Profitability Rank of 5/10, GDS Holdings Ltd's profitability is moderate within its industry. The company's operating margin stands at 7.42%, which is better than 62.79% of its industry peers. However, its Return on Equity (ROE) is at -5.77%, and Return on Assets (ROA) is at -1.71%, both metrics indicating challenges in profitability but still outperforming a significant portion of competitors. The Return on Invested Capital (ROIC) at 1.35% is also better than nearly half of the industry, suggesting GDS is generating cash flow effectively relative to the capital invested.
Growth Trajectory of GDS Holdings
The company's Growth Rank is a perfect 10/10, reflecting its strong performance in revenue expansion. GDS's 3-Year Revenue Growth Rate per Share is 19.70%, outpacing 73.12% of its industry peers. The 5-Year Revenue Growth Rate per Share is even more impressive at 25.00%, surpassing 86.56% of competitors. The estimated Total Revenue Growth Rate for the next 3 to 5 years is 10.74%, which is better than nearly half of the industry. However, the company's 3-Year and 5-Year EPS without NRI Growth Rates are negative, at -36.60% and -24.10% respectively, indicating areas for improvement.
Notable Shareholders in GDS Holdings
Among the notable shareholders of GDS Holdings, Steven Cohen (Trades, Portfolio) holds 186,200 shares, representing a 0.1% stake in the company. Jim Simons (Trades, Portfolio), another prominent investor, holds 13,600 shares, accounting for a 0.01% share percentage. These investments by well-known figures in the financial world underscore the interest in GDS's market potential.
Competitive Landscape
When comparing GDS Holdings to its competitors, we see that NCR Voyix Corp (VYX, Financial) has a slightly higher market capitalization at $1.78 billion, while Perficient Inc (PRFT, Financial) is closely aligned with GDS at $1.55 billion. N-able Inc (NABL, Financial) stands at a higher market cap of $2.29 billion. These comparisons provide context to GDS's market position within the software industry.
Conclusion
In summary, GDS Holdings Ltd's recent stock performance has been remarkable, with a 34.49% gain over the past three months. The company's market valuation, as indicated by the GF Value, suggests caution for potential investors. GDS's profitability metrics, while mixed, show that it is competitive within its industry. The company's growth rates in revenue are strong, but earnings per share growth rates highlight areas for potential improvement. Notable shareholders maintain a presence in GDS, and a comparison with competitors reveals a solid market position. Investors should weigh these factors carefully when considering GDS Holdings as part of their investment portfolio.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
