Over the past six months, DigitalBridge has been a great trade, beating the S&P 500 by 12.2%. Its stock price has climbed to $12.04, representing a healthy 27.9% increase. This run-up might have investors contemplating their next move.
Is now the time to buy DigitalBridge, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is DigitalBridge Not Exciting?
We’re happy investors have made money, but we don't have much confidence in DigitalBridge. Here are two reasons you should be careful with DBRG and a stock we'd rather own.
1. Revenue Spiraling Downwards
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
DigitalBridge’s demand was weak over the last five years as its revenue fell at a 21.7% annual rate. This wasn’t a great result and is a sign of lacking business quality.
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.2. Previous Growth Initiatives Haven’t Impressed
Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.
Over the last five years, DigitalBridge has averaged an ROE of 1.3%, uninspiring for a company operating in a sector where the average shakes out around 10%.
Final Judgment
DigitalBridge isn’t a terrible business, but it doesn’t pass our bar. With its shares topping the market in recent months, the stock trades at 1.2× forward P/E (or $12.04 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. We’d suggest looking at one of our all-time favorite software stocks.
Stocks We Would Buy Instead of DigitalBridge
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