Shares of enterprise content platform Box (BOX) fell 6.8% on May 13 to close trading at $18.87. Box stock has fallen close to 8.5% since the start of May 2019. It’s currently trading 21% above its 52-week low of $15.64 and 37% below its 52-week high of $29.79. The stock has still gained ~12% this year despite losing close to 7% on May 13.
Is Box stock attractive at its current valuation?
Box is still posting a non-generally accepted accounting principles loss, and we can’t value its stock using its PE multiple, but the company is expected to experience revenue growth over the next few years.
Box’s sales are expected to rise from $608 million in fiscal 2019 (which ended in January) to $702 million in 2020, $813 million in 2021, and $945 million in 2022. The company’s operating leverage is high, indicating that its bottom line will grow at a far better pace than its revenue.
Box’s operating profit is expected to rise from -2.5% in fiscal 2019 to -0.3% in fiscal 2020, 4.4% in fiscal 2021, and 9.7% in fiscal 2022. Analysts expect Box’s EPS to rise at a compound annual growth rate of 8% over the next five years.
Wall Street estimates
Of the 12 analysts tracking Box, ten have given it “buys,” two have given it “holds,” and none have given it “sells.” The average 12-month target price for Box stands at $24.85, indicating that its stock is trading at a discount of 32% to analysts’ average estimate.