GoDaddy Inc provides cloud-based products and personalised customer support to small businesses, web design professionals, and individuals. The company maintains an inventory of domain name extensions and operates a marketplace for trading previously owned domains. GoDaddy offers customers website building, hosting, and security tools to construct and protect their online presence. The company’s platform provides tools and applications such as domain-specific email, online storage, invoicing, bookkeeping, and payment solutions, which help clients manage their businesses.
Recommendation (Sept 2020)
Not a great business, but a not a poor one either. A price of $71.60 per share does not make for a great investment.
$71.60 per share implies that GDDY will grow its revenue at a CAGR of 17% over the next 5 years, at an EBIT margin of c.11% (last 5-year average EBIT margin has been 3%).
Our intrinsic value estimate is around $48, which would imply revenue growth at 13% CAGR, with EBIT margin c.10%, for the next 5 years.
If we assume that EPS will grow at a 15% CAGR for 5 years and that GDDY will trade at a PE multiple of 35x in 2024, then the Projected-Price in 2024 would be $56 per share.
A purchase today at $71.60 would result in a loss of 22%.
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