GLXY

We rate Galaxy Digital Inc. (GLXY) as a Reduce with a composite score of 43.3/100 at a current price of $21.27. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (82th percentile) and value (75th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (8th percentile) and momentum (18th percentile) tempers our overall conviction. We assign a No Moat rating (38/100), Very High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Galaxy Digital Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.3/100 places it at rank #3068 in our full 7,333-stock universe. At $7.5B in market capitalization, Galaxy Digital Inc. is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 226%, though momentum at the 18th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 100% (+23.5pp vs sector) narrow to operating margins of -1% (-18.0pp vs sector) and net margins of 1.8%, yielding a gross-to-net conversion rate of 2%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $21.27, Galaxy Digital Inc. appears undervalued relative to its fundamentals. Our value factor score of 75/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 3.7x (a 69% discount to the sector median of 11.9x), EV/EBITDA of 3.3x (discounted to peers), P/B of 1.3x, P/S of 0.0x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Very High uncertainty rating to Galaxy Digital Inc.. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 3.75), significant leverage (263% debt-to-equity), below-average price stability (8th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 3.75); significant leverage (263% debt-to-equity); below-average price stability (8th percentile); the combination of leverage (263% D/E) and thin margins (1.8% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 8th percentile and quality factor at the 82th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Galaxy Digital Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 63.7%, and the balance sheet is managed within acceptable parameters (D/E: 263%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Galaxy Digital Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Galaxy Digital Inc. receives a Reduce rating with a composite score of 43.3/100 (rank #3068 of 7,333). Our quantitative framework assigns a No Moat (38/100, trend: stable), Very High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 41/100.

Our analysis does not support a constructive view on Galaxy Digital Inc. at this time. The combination of limited competitive advantages, very high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.