The global cloud storage market is rapidly growing, driven by increasing demand from businesses and consumers. The rise of smart home devices, connected gadgets, video streaming, and digital payments generates massive amounts of data daily. This surge fuels the need for cloud storage, expanding opportunities for innovation and investment in the tech sector.
Therefore, top cloud storage stocks like Dropbox, Inc. (DBX) and Box, Inc. (BOX) are must-buys now.
The cloud storage market thrives as businesses seek cost-effective data management solutions, fueled by digitalization in industries like BFSI, healthcare, and telecom. This trend enhances performance, security, and scalability, driving demand for advanced storage solutions. As a result, the global cloud storage market is projected to reach $234.90 billion by 2028, with a CAGR of 18.8%.
Furthermore, cloud storage is increasingly popular among consumers for its convenience, allowing file storage, access, and sharing across devices. Services like content collaboration offer affordable, secure solutions for managing media and documents without local storage limits. The consumer cloud storage market is projected to reach $117.50 billion by 2036, growing at a CAGR of 18.1%.
On top of it, investors’ interest in tech stocks is evident from the Vanguard Information Technology Index Fund ETF Shares’ (VGT) 32.7% returns over the past year.
Considering these conducive trends, let’s assess the fundamentals of the two cloud storage picks, starting with the second choice.
Stock #2: Dropbox, Inc. (DBX)
DBX provides a content collaboration platform worldwide. The company’s platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features.
In terms of the trailing-12-month EBIT margin, DBX’s 18.70% is 280% higher than the 4.92% industry average. Similarly, its 23.06% trailing-12-month net income margin is 525.7% higher than the industry average of 3.68%. Its 0.90x trailing-12-month asset turnover ratio is 44.5% higher than the industry average of 0.62x.
In the fiscal second quarter that ended June 30, 2024, DBX’s revenue stood at $634.50 million, up 1.9% year-over-year, and non-GAAP gross profit rose 4.1% year-over-year to $536.30 million. For the same quarter, its non-GAAP net income and net income per share increased 11.6% and 17.6% over the prior-year quarter to $194.10 million and $0.60, respectively.
Analysts expect DBX’s revenue for the quarter ending September 30, 2024, to increase marginally year-over-year to $637. 19 million. Its EPS for the quarter ending December 31, 2024, is expected to rise 4.7% year-over-year to $0.52. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 17.7% to close the last trading session at $24.63.
DBX’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #15 out of 75 stocks in the Technology - Services industry. It has an A grade for Quality and a B for grade for Value. To access additional grades for DBX’s Growth, Momentum, Stability, and Sentiment, click here.
Stock #1: Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. It serves financial services, health care, government, and legal services industries internationally.
On September 17, 2024, BOX announced that Oxera Consulting LLP selected BOX as its centralized cloud platform for intelligent content management, improving collaboration and data security. Oxera will leverage BOX’s tools to manage content across its international offices.
On August 8, 2024, BOX announced it had acquired Alphamoon’s AI-powered document processing technology to strengthen its Intelligent Content Management platform. This acquisition helps BOX automate document tasks and extract metadata more efficiently, using advanced OCR and large language models.
In terms of the trailing-12-month Return on Total Capital, BOX’s 8.62% is 214.3% higher than the 2.74% industry average. Likewise, its 13.17% trailing-12-month Return on Total Assets is 542.4% higher than the industry average of 2.05%. Also, its 31.43% trailing-12-month levered FCF margin is 204.3% higher than the industry average of 10.33%.
BOX’s revenues for the second quarter ended July 31, 2024, increased 3.3% year-over-year to $270.04 million. Its non-GAAP gross profit increased 9.5% year-over-year to $220.24 million. The company’s non-GAAP operating income increased 18.5% year-over-year to $76.69 million.
Additionally, its non-GAAP attributable net income increased 18.3% year-over-year to $64.74 million. Its non-GAAP attributable net income per share increased 22.2% year-over-year to $0.44.
Street expects BOX’s EPS and revenue for the quarter ending October 31, 2024, to increase 17.4% and 5.2% year-over-year to $0.42 and $275.10 million, respectively. BOX surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 33.7% to close the last trading session at $33.43.
BOX’s POWR Ratings reflect robust prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is ranked #6 in the Technology – Services industry. It has an A grade for Growth and Quality and a B for Value. Click here to see BOX’s Momentum, Stability, and Sentiment ratings.
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DBX shares were trading at $24.62 per share on Wednesday afternoon, down $0.01 (-0.04%). Year-to-date, DBX has declined -16.49%, versus a 19.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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