Both end markets continue to expand and it’s hard to imagine those trends reversing anytime soon. And Dropbox operates in two attractive markets: the cloud and data. While its growth is slow, it’s also steady. Keep in mind, Dropbox was one of the fastest SaaS companies to reach $1 billion in revenue. Shares trade at just 20 times this year’s earnings and just five times this year’s revenue. So where’s the opportunity? While this is a slower growth mid-cap tech stock, DBX stock trades at a very reasonable valuation. On the plus side, margins are expanding, as consensus estimates call for almost 40% earnings growth this year and 12.5% growth in 2022. Three straight years of declining revenue growth from 2020 isn’t exactly a great sign. Therein also lies an opportunity, though.įor 2021 through 2023, analysts expect revenue growth of 10.1%, 8.9% and 7.3%, respectively. However, we run into a problem when it comes to growth. That’s incredibly impressive, given the company’s revenue of $1.91 billion. Additionally, the company logged free cash flow nearing $500 million. It did accelerate, but not in dramatic fashion.Ģ020 revenue climbed 15% year over year, while annual recurring revenue topped $2 billion. The hope was that Covid-19 would accelerate Dropbox’s business in a significant manner. The company not only provides secure storage solutions, but also collaboration tools to help teams get more done. Dropbox helps people be organized, stay focused, and get in sync with their teams.” “We believe there’s a more enlightened way to work. They constantly ping, distract, and disrupt your team’s flow, so you spend your days switching between apps and tracking down feedback. “Most ‘productivity tools’ get in your way. Breaking Down Dropboxĭropbox is a software-as-a-service (SaaS) company that attempts to help teams stay organized and productive. That doesn’t mean it’s a bad business though. It sits somewhere in between moderate growth and mid-cap stock. It’s also not a high-growth mid-cap stock. Instead, it’s what the company will do going forward.ĭropbox is an interesting company. And to be honest, what Dropbox has done over the past few years isn’t the main concern. While that doesn’t negate the past several years of performance, it’s a start.
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