MicroStrategy Incorporated (MSTR) is primarily known for its business intelligence software services. However, the company’s hefty Bitcoin investments have made headlines recently, nudging some to perceive MSTR more as a cryptocurrency player than a traditional software company. Is this warranted? We delve into MicroStrategy’s core business vis-a-vis its substantial Bitcoin holdings, before commencing an in-depth financial performance analysis.
MicroStrategy: An Overview of Financial Performance
Looking at a longer horizon, in the last five years, the company’s revenue growth may seem uninspiring at -0.28%. In stark contrast, MSTR scored an eye-popping 1807.12% earnings growth over the same period.
Probing further into profitability ratios, we note that Return on Assets (RoA) and Return on Equity (RoE) stand at -3.98% and -5.99% respectively. The Return on Invested Capital (RoIC), at 13.83%, and Debt Equity Ratio, at 100.79%, hints at the company’s risk management efficiency.
Turning to the valuation ratios, the Price to Earnings (P/E) Ratio rests at 48.54, with a Price to Book (P/B) Ratio of 11.6. A lofty Price to Cash Flow (P/CF) Ratio of 1922.04 reveals the market’s decidedly optimistic view of the company’s future cash-generating ability.
Analyst Coverage and Recommendations on MicroStrategy:
Stock Target Advisor currently rates MicroStrategy’s stock as a ‘Hold’. Out of six market analysts currently covering MSTR, the average rating is a ‘Strong Buy’ at a target price of $1854.82. Maximum and minimum target prices sit at $2890 and $975 respectively.
MicroStrategy operates in the Software – Application sector. Here, an examination of sector performance is in order, along with Stock Target Advisor’s rating for the sector. A peek into the average one-month and one-week returns offers additional insight, as does a look at rankings by top analysts in the sector.
Conclusion:
MicroStrategy with its unique hybrid nature, offers a fascinating case study. The company straddles both digital asset investing and enterprise analytics software provision offering investors an intriguing blend of both ‘Old’ and ‘New’ economy exposure.
