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Dropbox (DBX) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Dropbox (DBX) closed at $20.55, marking a -1.2% move from the previous day. This move lagged the S&P 500's daily loss of 0.52%. At the same time, the Dow lost 0.13%, and the tech-heavy Nasdaq lost 1.4%.

Prior to today's trading, shares of the online file-sharing company had gained 14.6% over the past month. This has outpaced the Computer and Technology sector's gain of 13.6% and the S&P 500's gain of 13.35% in that time.

Wall Street will be looking for positivity from DBX as it approaches its next earnings report date. This is expected to be May 7, 2020. The company is expected to report EPS of $0.14, up 40% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $451.78 million, up 17.16% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.70 per share and revenue of $1.87 billion, which would represent changes of +40% and +12.76%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for DBX. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable 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 past month, the Zacks Consensus EPS estimate remained stagnant. DBX is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, DBX is holding a Forward P/E ratio of 29.93. Its industry sports an average Forward P/E of 27.19, so we one might conclude that DBX is trading at a premium comparatively.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 47, putting it in the top 19% of all 250+ industries.

The Zacks Industry Rank includes is listed in order 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.

To follow DBX in the coming trading sessions, be sure to utilize Zacks.com.

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