HIVE Digital Technologies (TSX:HIVE) Pulled Back Following A Strong Run, Is It Trading At A Discount?

Recent Share Performance and Business Snapshot

HIVE Digital Technologies (TSX:HIVE) has drawn attention after a mixed stretch for the stock, with the share price down 14.6% over the past month but up 31.2% in the past 3 months.

The company operates data centers powered by green energy across Bermuda, Paraguay, Sweden and Canada, focusing on mining and sale of digital currencies and performance computing hosting. Its market cap stands at approximately CA$1.22b.

See our latest analysis for HIVE Digital Technologies.

At a share price of CA$4.46, HIVE Digital Technologies has seen short term momentum cool, with a 1 month share price return down 14.6%, while the 1 year total shareholder return of 50.2% sits against weaker 3 and 5 year total shareholder returns.

If you are looking beyond HIVE Digital Technologies in the digital assets space, this may be a moment to scan for other cryptocurrency and blockchain related opportunities using the 19 cryptocurrency and blockchain stocks.

The recent pullback in HIVE Digital Technologies after a strong 3 month run could point to cooling enthusiasm rather than a major shift in the underlying business. How does the current share price stack up against its fundamentals?

Preferred Price-to-Sales Multiple of 2.8x: Is It Justified?

On the latest numbers, HIVE Digital Technologies trades on a P/S ratio of 2.8x, which screens as inexpensive compared with both peers and its estimated fair level.

The P/S ratio compares the company’s market value to its revenue and is often used when a business is unprofitable, as is the case with HIVE Digital Technologies. With current revenue of approximately $297.8m and a market cap of about CA$1.22b, investors are effectively paying a modest multiple of sales for a company where earnings are still in the red.

Against the Canadian Software industry average P/S of 3.1x, HIVE Digital Technologies trades at a lower multiple, and it also sits below the peer average of 5.4x. Compared with an estimated fair P/S ratio of 3.5x, the current 2.8x level suggests the market is assigning a discount that could narrow if revenue delivers in line with the forecast 25.3% annual growth.

Explore the SWS fair ratio for HIVE Digital Technologies

Result: Price-to-sales ratio of 2.8x (UNDERVALUED)

However, HIVE Digital Technologies still carries clear risks, including ongoing losses of $148.448m and heavy revenue dependence on Bermuda, which could amplify any local regulatory or operational shocks.

Find out about the key risks to this HIVE Digital Technologies narrative.

Next Steps

With mixed signals around HIVE Digital Technologies, do you want to rely on headlines or look at the underlying detail yourself and act promptly? To weigh up both sides of the story, take a closer look at the 2 key rewards and 5 important warning signs.

Looking For More Investment Ideas Beyond HIVE Digital Technologies?

If you stop at HIVE Digital Technologies, you may miss other opportunities. Put a few minutes into fresh ideas that could broaden and strengthen your portfolio.

• Target potential bargains with strong fundamentals by scanning our 5 high quality undervalued stocks that filters for companies combining quality with attractive pricing.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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