Duolingo, Inc. Fundamental Analysis (NASDAQ: DUOL)
Duolingo, Inc. (NASDAQ: DUOL) shows moderate financial fundamentals with a PE ratio of 52.46, profit margin of 12.33%, and ROE of 10.35%. The company generates $1.0B in annual revenue with strong year-over-year growth of 38.71%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 81.9/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze DUOL's fundamental strength across five key dimensions:
Efficiency Score
WeakDUOL struggles to generate sufficient returns from assets.
Valuation Score
ModerateDUOL shows balanced valuation metrics.
Growth Score
ModerateDUOL shows steady but slowing expansion.
Financial Health Score
ExcellentDUOL maintains a strong and stable balance sheet.
Profitability Score
WeakDUOL struggles to sustain strong margins.
Key Financial Metrics
Is DUOL Expensive or Cheap?
P/E Ratio
DUOL trades at 52.46 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, DUOL's PEG of -0.83 indicates potential undervaluation.
Price to Book
The market values Duolingo, Inc. at 5.17 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 39.85 times EBITDA. This signals the market has high growth expectations.
How Well Does DUOL Make Money?
Net Profit Margin
For every $100 in sales, Duolingo, Inc. keeps $12.33 as profit after all expenses.
Operating Margin
Core operations generate 12.42 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.35 in profit for every $100 of shareholder equity.
ROA
Duolingo, Inc. generates $6.73 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Duolingo, Inc. generates strong operating cash flow of $379.40M, reflecting robust business health.
Free Cash Flow
Duolingo, Inc. generates strong free cash flow of $349.28M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $8.57 in free cash annually.
FCF Yield
DUOL converts 6.01% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
52.46
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-0.83
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.17
vs 25 benchmark
P/S Ratio
Price to sales ratio
5.65
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.06
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.75
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.10
vs 25 benchmark
ROA
Return on assets percentage
0.07
vs 25 benchmark
ROCE
Return on capital employed
0.09
vs 25 benchmark
How DUOL Stacks Against Its Sector Peers
| Metric | DUOL Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 52.46 | 32.70 | Worse (Expensive) |
| ROE | 10.35% | 758.00% | Weak |
| Net Margin | 12.33% | -4312.00% (disorted) | Strong |
| Debt/Equity | 0.06 | 0.96 | Strong (Low Leverage) |
| Current Ratio | 2.75 | 12.15 | Strong Liquidity |
| ROA | 6.73% | 1067467.00% | Weak |
DUOL outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Duolingo, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
403.17%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
2158.08%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
1617.33%
Industry Style: Growth, Innovation, High Beta
High Growth