Which Is a Better Investment, DigitalOcean Holdings Inc or IONQ Inc Stock? (2023)

Sifting through countless of stocks in the IT Services & Consulting industry can be tedious, and sometimes two stocks are just too similar to judge which is the better investment. If you’re on the fence about investing in DigitalOcean Holdings Inc or IONQ Inc because you’re not sure how they measure up, it’s important to compare them on a few factors before making your decision.

Read on to learn how DigitalOcean Holdings Inc and IONQ Inc compare based on key financial metrics to determine which better meets your investment needs.

DigitalOcean Holdings, Inc. is a cloud computing platform offering on-demand infrastructure and platform tools for developers, start-ups and small-to-medium size businesses. The Company?s platform simplifies cloud computing, enabling its customers to rapidly accelerate productivity and agility. The Company offers mission-critical infrastructure solutions across compute, storage and networking, and also enables developers to extend the native capabilities of the Company?s cloud with fully managed application, container and database offerings. The Company offers Compute, Storage, Networking, developer tools and Managed Databases. Its products include Droplets, Spaces, Managed Kubernetes and Container Registry, Managed Databases, App Platform and others. Its customers use its platform across numerous industry verticals and for a range of use cases, such as Web and mobile applications, Website hosting, e-commerce, media and gaming, personal Web projects, and managed services, among others.

IonQ, Inc. is a quantum computing company. The Company is engaged in quantum computing and develops general-purpose quantum computing systems. The Company has developed custom hardware, custom firmware, and an operating system to arrange the quantum computers. The Company's computer systems consist of trapped-ion quantum technology. The Company makes access to its quantum computers via three cloud platforms, Amazon Web Services (AWS) Amazon bracket, Microsoft Azure Quantum, and Google?s Cloud Marketplace, and to select customers via its own cloud service. The Company supplements its QCaaS offering with professional services focused on assisting its customers in applying quantum computing to their businesses. The Company also sells full quantum computing systems to customers, either over the cloud or for local access.

As of May 25, 2023, DigitalOcean Holdings Inc had a $3.0 billion market capitalization, compared to the IT Services & Consulting median of $281.8 million. DigitalOcean Holdings Inc’s stock is NA in 2023, NA in the previous five trading days and down 20.74% in the past year.

Currently, DigitalOcean Holdings Inc does not have a price-earnings ratio. DigitalOcean Holdings Inc’s trailing 12-month revenue is $576.3 million with a -4.6% net profit margin. Year-over-year quarterly sales growth most recently was 36.2%. Analysts expect adjusted earnings to reach $1.687 per share for the current fiscal year. DigitalOcean Holdings Inc does not currently pay a dividend.

Currently, IONQ Inc does not have a price-earnings ratio. IONQ Inc’s trailing 12-month revenue is $13.5 million with a -532.0% net profit margin. Year-over-year quarterly sales growth most recently was 115.0%. Analysts expect adjusted earnings to reach $-0.552 per share for the current fiscal year. IONQ Inc does not currently pay a dividend.

Stock evaluation requires access to huge amounts of data and the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movements. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors streamline and work through such data.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A‐F grades for each of five key investing factors: value, growth, momentum, earnings estimate revisions and quality. Here, we’ll take a closer look at DigitalOcean Holdings Inc and IONQ Inc’s stock grades to see how they measure up against one another.

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Successful stock investing involves buying low and selling high, so stock valuation is an important consideration for stock selection.

Buying stocks that are going to go up typically means buying stocks that are undervalued in the first place, although momentum investors may argue that point.

AAII’s A+ Investor Value Grade derives from a stock’s value score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are a good value and so on.

DigitalOcean Holdings Inc has a Value Score of 20, which is Ultra Expensive. IONQ Inc has a Value Score of 7, which is Ultra Expensive.

Neither DigitalOcean Holdings Inc or IONQ Inc has a high enough value grade to be considered a “winner.” Investors who are considering these companies should do additional due diligence and research to see if either could be a good addition to their portfolio. It’s important to look at a wide range of financial metrics in order to determine if DigitalOcean Holdings Inc or IONQ Inc is the better investment when it comes to value.

The foundation of growth investing is seeking out stocks of companies exhibiting strong, consistent and prolonged growth that is expected to continue into the future.

In order to compute the growth score and assign it a letter grade, the percentile ranks for each of three components‐consistency of annual sales growth, five-year sales growth rankings adjusted for extreme levels, and consistency of positive annual cash from operations‐must be determined. These three rank figures are added together, and the sum is ranked against the entire stock universe to arrive at a company’s Growth Score to create an equal distribution of grades.

The companies in the bottom 20% of the stock universe receive Growth Grades of F, considered to be very weak, while those in the top 20% receive A grades, which are considered very strong.

DigitalOcean Holdings Inc has a Growth Score of 51, which is Average. IONQ Inc has a Growth Score of 17, which is Very Weak.

Like the Value Grade, AAII’s A+ Investor Quality Grade comes from the percentile rank of key metrics. Specifically, the Quality Score is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit relative to assets, buyback yield, change in total liabilities to assets, accruals, Z double prime bankruptcy risk (Z) score and the F-Score.

The score is variable, meaning it can consider all eight measures or, should any of the eight measures not be valid, the remaining measures that are valid. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

The Quality Score is used to assess the underlying “quality” of a particular stock. A higher-quality stock possesses traits associated with upside potential and reduced downside risk. Backtesting of the Quality Grade shows that stocks with higher grades, on average, outperformed stocks with lower grades over the period of 1998 through 2019.

Stocks receive better grades (higher scores) for having higher scores for the quality subcomponents and worse grades (lower scores) for lower scores for the subcomponents.

DigitalOcean Holdings Inc has a Quality Score of 71, which is Strong. IONQ Inc has a Quality Score of 44, which is Average.

Momentum grades help uncover stocks experiencing anomalously high rates of return; research finds that stocks with high relative levels of momentum tend to outperform, whereas those with low levels of momentum tend to continue underperforming.

Earnings estimate revisions scores take into account the magnitude of a company’s earnings surprise in its last two reported fiscal quarters. Often, surprises beget further surprises‐or at least continued sales growth (the exact opposite is generally true, too).

These 2 key factors, when combined with the above, provide a holistic view into a particular stock. Further, by joining A+ Investor you can see whether DigitalOcean Holdings Inc and IONQ Inc pass any of our 60+ stock screens that have outperformed the market since their creation.

Overall, DigitalOcean Holdings Inc stock has a Value Score of 20, Growth Score of 51 and Quality Score of 71.

IONQ Inc stock has a Value Score of 7, Growth Score of 17 and Quality Score of 44.

Comparing DigitalOcean Holdings Inc and IONQ Inc’s grades, scores and metrics can act as a solid basis to determine whether they may be a good investment or not. You’ll also want to look at your portfolio’s asset allocation as well as your risk tolerance and financial goals to see if either of these stocks would make a good fit for you. AAII can help you figure out which investments align with your individual needs and preferences.

Investors are encouraged to do their own due diligence and research. In this way, individuals can effectively become managers of their own assets‐without having to rely on others for financial independence. You can count on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis.

A+ Investor adds to our qualitative teaching with a powerful data suite to help you whittle down investment choices to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.