DraftKings Inc (DKNG, Financial), a leading player in the Travel & Leisure industry, has seen a significant surge in its stock price over the past quarter. With a current market cap of $16.38 billion and a price of $35.13, the company's stock has gained 30.50% over the past week and 10.68% over the past three months. This article will delve into the factors contributing to this impressive performance and provide an in-depth analysis of the company's profitability, growth, and competitive landscape.
Stock Performance and Valuation
The GF Value of DraftKings Inc currently stands at $37.99, a significant drop from the past GF Value of $86.93 three months ago. The GF Value, defined by GuruFocus.com, calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates. The current GF Valuation indicates that the stock is fairly valued, a stark contrast to the possible value trap situation three months ago when the stock was overvalued.
Company Overview
Founded in 2012, DraftKings Inc has evolved from a daily fantasy sports innovator to a major player in online sports and casino gambling. Following a Supreme Court ruling in 2018, the company expanded its operations and now holds the number two or three revenue share position across states in which it competes. DraftKings is currently live with online sports betting in 21 states and iGaming in five states, with both products available to around 40% of Canada's population. The company also operates a non-fungible token commissioned-based marketplace and develops and licenses online gaming products.
Profitability Analysis
Despite its impressive growth, DraftKings Inc's Profitability Rank stands at 3/10, indicating its relative profitability within the industry. The company's Operating Margin is -38.18%, better than 9.01% in 821 companies. Its ROE is -89.02%, better than 5.28% in 795 companies, while its ROA is -29.59%, better than 6.31% in 840 companies. The company's ROIC is -43.94%, better than 4.07% in 836 companies.
Growth Prospects
DraftKings Inc's Growth Rank is 6/10, indicating its relative growth within the industry. The company's 3-Year Revenue Growth Rate per Share is 43.10%, better than 95.96% in 767 companies, while its 5-Year Revenue Growth Rate per Share is 37.00%, better than 97.77% in 718 companies. The company's Total Revenue Growth Rate (Future 3Y To 5Y Est) is 31.00%, better than 94.81% in 135 companies. However, the company's 3-Year EPS without NRI Growth Rate is -61.20%, better than 5.97% in 536 companies, and its 5-Year EPS without NRI Growth Rate is -68.60%, better than 2.44% in 246 companies.
Major Stock Holders
The top three holders of DraftKings Inc's stock are Catherine Wood (Trades, Portfolio), holding 18,060,463 shares (3.91%), Ron Baron (Trades, Portfolio), holding 2,183,918 shares (0.47%), and Steven Cohen (Trades, Portfolio), holding 1,871,412 shares (0.4%). Their significant investments in the company reflect their confidence in its growth potential and profitability.
Competitive Landscape
DraftKings Inc faces stiff competition within the Travel & Leisure industry. Its main competitors include Churchill Downs Inc with a market cap of $8.86 billion, Light & Wonder Inc with a market cap of $7.27 billion, and International Game Technology PLC with a market cap of $5.68 billion. Despite the competition, DraftKings Inc's impressive growth and profitability metrics indicate its strong market position.
Conclusion
In conclusion, DraftKings Inc's impressive stock performance over the past quarter can be attributed to its strong growth prospects, strategic market position, and the confidence of major stockholders. Despite its low profitability rank and the competitive landscape, the company's growth metrics and future revenue growth estimates indicate its potential for further growth. However, investors should be cautious of the company's current fair valuation and monitor its profitability and growth metrics closely.
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.
