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Dropbox (DBX) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

Dropbox (DBX) closed at $20.29 in the latest trading session, marking a +0.15% move from the prior day. The stock lagged the S&P 500's daily gain of 1.34%. Elsewhere, the Dow gained 2.13%, while the tech-heavy Nasdaq added 0.94%.

Heading into today, shares of the online file-sharing company had lost 5.86% over the past month, lagging the Computer and Technology sector's gain of 7.45% and the S&P 500's gain of 3.92% in that time.

Investors will be hoping for strength from DBX as it approaches its next earnings release. The company is expected to report EPS of $0.17, up 70% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $464.68 million, up 15.74% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.74 per share and revenue of $1.89 billion, which would represent changes of +48% and +13.68%, 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 52.94% higher. DBX currently has a Zacks Rank of #3 (Hold).

In terms of valuation, DBX is currently trading at a Forward P/E ratio of 27.38. This valuation marks a discount compared to its industry's average Forward P/E of 34.28.

It is also worth noting that DBX currently has a PEG ratio of 0.84. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DBX's industry had an average PEG ratio of 2.81 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 154, which puts it in the bottom 40% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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Zacks Investment Research