Digital Turbine

Digital Turbine Inc receives a 3-star quantitative star rating, reflecting our opinion that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 61% premium over our quantitative fair value estimate of $6.52 per share; however, this estimate should be taken with a pinch of salt due to its extreme uncertainty rating.

The firm's valuation metrics decrease our fair value estimate. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. For example, the firm's book value yield of 14.1% sits in the bottom 20% globally. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which contributes to our view that shares are overvalued.

The company's lack of growth is an additional cause for concern. Stagnant revenue and earnings growth indicates a company's challenges in increasing market share and profitability. The firm's EPS 5-year growth of -11.0%, for example, sits in the bottom 20% globally. On a relative basis, EPS growth has lagged over the last five years, which further promotes our unfavorable price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. This outperformance may signify a bull trap, in light of other detractors from our model.

This company lacks a competitive advantage, receiving a quantitative economic moat rating of none. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.