Box’s 20% return over the past six months has outpaced the S&P 500 by 13.7%, and its stock price has climbed to $31.30 per share. This run-up might have investors contemplating their next move.
Is now the time to buy Box, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.We’re happy investors have made money, but we're cautious about Box. Here are two reasons why there are better opportunities than BOX and a stock we'd rather own.
Why Is Box Not Exciting?
Founded in 2005 by Aaron Levie and Dylan Smith, Box (NYSE:BOX) provides organizations with software to securely store, share and collaborate around work documents in the cloud.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Box’s sales grew at a sluggish 8.5% compounded annual growth rate over the last three years. This fell short of our benchmark for the software sector. 
2. Weak Billings Point to Soft Demand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Box’s billings came in at $264.7 million in Q3, and over the last four quarters, its year-on-year growth averaged 5%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
Final Judgment
Box isn’t a terrible business, but it isn’t one of our picks. With its shares beating the market recently, the stock trades at 4.1× forward price-to-sales (or $31.30 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better investments elsewhere. We’d suggest looking at Meta, a top digital advertising platform riding the creator economy.
Stocks We Like More Than Box
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market to cap off the year - and we’re zeroing in on the stocks that could benefit immensely.
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Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,691% between September 2019 and September 2024) as well as under-the-radar businesses like Comfort Systems (+783% five-year return). Find your next big winner with StockStory today for free.
