Box Inc (BOX, Financial) recently reported a notable daily gain of 8.23% and a 3-month gain of 5.16%. With an Earnings Per Share (EPS) of $0.67, investors might wonder if the stock is currently undervalued. This article delves into the intrinsic valuation of Box, providing a detailed analysis to answer whether the current market price truly reflects its worth.
Understanding Box Inc (BOX, Financial)
Founded in 2005, Box is a leading cloud-based content services platform that has evolved from a file-sync and sharing provider to offering extensive workflow collaboration services, including governance and e-signature tools. This transition aims to enhance enterprise operational efficiency. Currently, with a market cap of $3.90 billion and a stock price of $27.1, Box stands as a significant player in the software industry. Below is an income breakdown of Box, providing a snapshot of its financial performance:
Decoding the GF Value
The GF Value is a proprietary measure calculated to represent the intrinsic value of a stock. For Box, this value is determined by assessing historical trading multiples such as PE Ratio, PS Ratio, PB Ratio, and Price-to-Free-Cash-Flow, alongside a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value suggests that Box is modestly undervalued at its current price, indicating a potential for higher future returns relative to its business growth.
Financial Strength and Stability
Investing in companies with robust financial health reduces the risk of loss. Box's financial strength is rated 5 out of 10, which is fair within the industry. The company's cash-to-debt ratio stands at 0.98, positioning it better than 65.29% of its peers. Here's a visual representation of Box's debt and cash flow over the past years:
Profitability and Growth Prospects
Box has maintained profitability over the past decade, with a revenue of $1 billion and an operating margin of 4.89% over the past twelve months. This performance is comparatively better than 54.4% of companies in the software industry. Additionally, Box's 3-year average annual revenue growth rate of 12.2% and EBITDA growth rate of 41.3% are impressive, indicating robust future potential.
Comparative Analysis: ROIC vs. WACC
A key metric to assess value creation is comparing the Return on Invested Capital (ROIC) against the Weighted Average Cost of Capital (WACC). Box's ROIC of 11.01 significantly surpasses its WACC of 7.43, suggesting efficient management and promising shareholder returns. Below is the historical comparison of Box's ROIC and WACC:
Final Thoughts
Considering its current market valuation, financial health, profitability, and growth trajectory, Box (BOX, Financial) appears to be modestly undervalued. For investors looking for potential investment opportunities, Box presents a promising option. Learn more about Box's detailed financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
