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Box, Inc. (NYSE:BOX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Box, Inc. provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. With the latest financial year loss of US$43m and a trailing-twelve-month loss of US$32m, the US$4.1b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Box's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Consensus from 8 of the American Software analysts is that Box is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$20m in 2024. So, the company is predicted to breakeven approximately 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 74%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Box given that this is a high-level summary, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. Box currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of Box to cover in one brief article, but the key fundamentals for the company can all be found in one place – Box's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:
Valuation: What is Box worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Box is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Box’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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