GoDaddy stock has skyrocketed 121.5% in the past year.
2024 has been great for GoDaddy (GDDY) shareholders, with the stock soaring 121.5% in the past year, from $71/share to $157/share today:
GoDaddy’s operating profits increased significantly in the first half of 2024, and analysts forecast continued revenue and earnings growth in the years to come.
GoDaddy primarily sells website domains and hosting in the United States and internationally. You’ve probably heard of GoDaddy if you’ve ever tried to build a website.
In a little over a decade, GoDaddy has also made 28 acquisitions to build out its eCommerce offerings and expand its services for businesses.
What’s the forecast for GoDaddy stock?
Over the past 5 years, GoDaddy has seen solid annual increases in sales, paired with expanding operating margins. This means the business grew and got to keep a higher percentage of its sales as profit:
Notable 5-Year Growth Figures:
- Revenue: 9.8% CAGR (compound annual growth rate)
- Operating Income: 29.6% CAGR
- Operating Margins: 18.0% CAGR (this is the rate the business’s profitability rate grew, which is really important)
See GoDaddy’s full financial history >>>
GoDaddy has already had a great start to 2024, with massive growth in the company’s operating income. In the first quarter, the company saw 83.2% year-over-year growth, and in the second quarter, it saw 51.7% growth from the previous year.
Analysts expect GoDaddy’s operating income to go bananas in 2024, with a consensus estimate of a 60.3% year-over-year change. In 2025 and beyond, analysts expect steady revenue growth with double-digit operating income growth:
Notable 3-Year Forecast Figures:
- Revenue: 7.4% CAGR
- Operating Income: 32.1% CAGR
Notable 5-Year Forecast Figures:
- Revenue: 7.9% CAGR
- Operating Income: 23.9% CAGR
GoDaddy’s massive growth in operating income this year was driven primarily by strong margin expansion. GoDaddy’s operating margins expanded from 13.5% in the second quarter of last year to 19.1% in the most recent quarter.
This might seem insignificant at first glance, but it actually translates into a 41.8% increase in operating profits. The rest of the operating income growth was driven by increased revenue.
See GoDaddy’s full analyst estimates >>>
GoDaddy’s stock forecast (in plain English)
GoDaddy has rapidly increased its profitability and is seeing steady revenue growth. This is a powerful combination, and analysts expect it to continue going forward.
For that reason, GoDaddy has a strong growth score and a strong forecast score.
GoDaddy’s COO is selling shares
News recently broke out that GoDaddy’s Chief Operating Officer, Roger Chen, had sold over $500,000, or 4,000 shares, of his GoDaddy stock.
However, Chen only sold off 2.87% of his $20.5 million position, so this probably isn’t a cause for too much concern.
When top company insiders sell their stock, it doesn’t always mean the stock is overvalued or management foresees something bad happening in the business’s future.
Managers might simply sell shares for personal financial needs, diversification, or other reasons.
But insiders only buy stock for one reason—they think the stock’s going up! Therefore, we like to look for insider buying and tend not to mind too much if there’s insider selling.
Unfortunately, not too many insiders have been buying GoDaddy stock recently:
Check out GoDaddy’s full list of insider transactions >>>
Is GoDaddy undervalued?
At the end of the day, the Big Daddy question of them all is, “Is the stock undervalued?”
Fun fact: The software company was almost named “Big Daddy” in reference to Adam Sandler’s Big Daddy movie, released in 1999. Here’s the story.
Today, analysts give $GDDY a consensus price target of $166. GoDaddy’s stock is trading right around $157.50 per share, so analysts think the stock has about 5.4% upside.
We aggregate consensus estimates from Wall Street’s sell-side analysts, so real people make these estimates. Of course, analysts get estimates wrong all the time, but checking out the analyst estimates is still a good place to start to see if a stock might be undervalued.
It’s fair to say that analysts think most of GoDaddy’s future growth has already been priced in, given the stock’s strong climb in the past year.
The graph below shows analysts’ target stock price vs the stock’s actual price over the last 5 years. On average, analysts thought $GDDY had 23.6% upside, so it’s a bit bearish that analysts today see less than 10% upside for $GDDY:
It’s never good to put all your trust in analyst estimates, so let’s check out the numbers for ourselves!
We’ll look at the company’s NTM EV/EBIT ratio, which divides the company’s enterprise value (market cap + total debt – cash) by analysts’ consensus estimates for its NTM (next twelve months) EBIT, or operating income.
GoDaddy is trading right below its 3-year average NTM EV/EBIT. This suggests $GDDY is probably just about fairly valued:
Check out GoDaddy’s full valuation analysis >>>
The Takeaway
GoDaddy stock has soared 121.5% in the past year, and analysts expect it to be just about fairly valued.
The company is expected to continue to see strong revenue growth and consistent, double-digit growth in operating income.
The TIKR Terminal offers industry-leading financial data on $GDDY and over 100,000 other stocks.
So if you’re looking to analyze and find the best stocks for your portfolio, you’ll want to use TIKR.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. We aim to provide informative and engaging analysis to help empower individuals to make their own investment decisions. Neither TIKR nor our authors hold any positions in the stocks mentioned in this article. Thank you for reading, and happy investing!
