Duolingo Inc. Rated Strongly by Growth Investment Strategy

Duolingo Inc. receives a strong 75% rating from the Small-Cap Growth Investor strategy, indicating solid fundamentals and performance. However, insider holdings and sales metrics fail to meet expectations, suggesting potential concerns for investors.

Date: 11-02-2025

AI Rating: 6

Profit Margins and Cash Flow Analysis
Duolingo Inc. has passed the profit margin tests, indicating a strong profitability status that could positively impact investor sentiment and drive stock prices up. Furthermore, the report notes the company has passed cash flow from operations, suggesting healthy cash generation which is crucial for growth and reinvestment opportunities.
Sales and EPS Growth
Duolingo has also passed the test comparing sales and EPS growth to the previous year, indicating that growth is being sustained. This is likely to positively affect investor confidence and could lead to increased stock demand.
Failure Points
However, there are some red flags. The company has failed on several tests, including income tax percentage, sales growth, daily dollar volume, and the “Fool Ratio” (P/E to growth), which indicates either profitability issues or valuation concerns. These failures could raise caution among investors and potentially exert downward pressure on stock prices.
Overall Investor Sentiment
While the high rating reflects strong aspects, the failures in key areas can lead to mixed perceptions among investors. Those focused on growth might still see potential but should be wary of the highlighted weak performance indicators, which may lead to a more conservative investment stance.

Stocks: DUOL