Dropbox (DBX) Exceeds Market Returns: Some Facts to Consider

Zacks Equity Research
·3-min read

Dropbox (DBX) ended the recent trading session at $21.94, demonstrating a +0.64% swing from the preceding day's closing price. The stock outperformed the S&P 500, which registered a daily gain of 0.09%. Meanwhile, the Dow lost 0.1%, and the Nasdaq, a tech-heavy index, added 0.16%.

The online file-sharing company's shares have seen a decrease of 4.76% over the last month, not keeping up with the Computer and Technology sector's gain of 4.06% and the S&P 500's gain of 2.83%.

The investment community will be closely monitoring the performance of Dropbox in its forthcoming earnings report. The company is forecasted to report an EPS of $0.52, showcasing a 1.96% upward movement from the corresponding quarter of the prior year. At the same time, our most recent consensus estimate is projecting a revenue of $629.65 million, reflecting a 1.15% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $2.12 per share and a revenue of $2.54 billion, demonstrating changes of +7.07% and +1.66%, respectively, from the preceding year.

Investors might also notice recent changes to analyst estimates for Dropbox. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. Dropbox is currently a Zacks Rank #1 (Strong Buy).

In terms of valuation, Dropbox is presently being traded at a Forward P/E ratio of 10.28. This denotes a discount relative to the industry's average Forward P/E of 22.65.

Also, we should mention that DBX has a PEG ratio of 0.9. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. By the end of yesterday's trading, the Internet - Services industry had an average PEG ratio of 1.95.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 172, which puts it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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