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How Does Box Inc (NYSE:BOX) Compare To The Tech Sector?

Box Inc (NYSE:BOX), is a US$3.09B mid-cap, which operates in the software industry based in United States. The past two decades have experienced unprecedented changes in technology, and the next decade looks equally drastic. Tech analysts are forecasting for the entire software tech industry, a positive double-digit growth of 12.93% in the upcoming year , and a robust short-term growth of 22.88% over the next couple of years. This rate is more than double the growth rate of the US stock market as a whole. Today, I’ll take you through the tech sector growth expectations, as well as evaluate whether Box is lagging or leading in the industry. View our latest analysis for Box

What’s the catalyst for Box’s sector growth?

NYSE:BOX Past Future Earnings Feb 22nd 18
NYSE:BOX Past Future Earnings Feb 22nd 18

Despite all the opportunities, tech companies still face a host of challenges, including coping with an increasingly burdensome global regulation. Since the regulatory environment is unlikely to become less complex, organizations will need to address the constantly evolving rules for governing privacy, security and handling of data, as well as cybersecurity issues. Over the past year, the industry saw growth in the teens, beating the US market growth of 10.01%. Box lags the pack with its lower growth rate of 8.32% over the past year, which indicates the company will be growing at a slower pace than its software peers. However, in the upcoming year, Box is expected to deliver growth in-line with its industry peers, at a growth rate of 12.99%.

Is Box and the sector relatively cheap?

NYSE:BOX PE PEG Gauge Feb 22nd 18
NYSE:BOX PE PEG Gauge Feb 22nd 18

The software tech industry is trading at a PE ratio of 25.86x, above the broader US stock market PE of 18.95x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 10.24% on equities compared to the market’s 10.36%. Since Box’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Box’s value is to assume the stock should be relatively in-line with its industry.

Next Steps:

Box’s future growth prospect shows that it is able to keep up with its peers. If Box has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the tech industry. However, before you make a decision on the stock, I suggest you look at Box’s fundamentals in order to build a holistic investment thesis.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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