Stock Valuation: Box Inc. (BOX)

Name of Company Country of Origin/ Exchange Traded Sector Stock Price
BOX INC US/
NYSE
Technology – Application Software – Software – Infrastructure USD28.15
@ 21 Jun 2018
COMPANY PROFILE Box Inc provides cloud content management platform that enables organizations to securely manage cloud content while allowing easy, secure access and sharing of content from anywhere, on any device.

Box Inc is an enterprise content management platform that enables organizations to access and share content from anywhere in a secure and convenient manner. The Box platform includes cloud architecture, mobility features, enterprise-grade security, tracking and reporting, and automation and workflow management capabilities. The company derives revenue from subscription fees for its cloud platform, its support package, and professional services. A large majority of the firm’s revenue is generated in the United States.

Stock Code BOX
Stock Valuation Below

Box Inc. Price to Sales

The Price to Sales Ratio is a commonly used valuation indicator for a stock. While not as popular as the Price to Earnings Ratio, it overcomes some of the limitations of the PE Ratio in that it can be used even when the company is not making a profit or only making minimal profits. However, it should not be used by itself because a company may be achieving sales but not profits.
At the price of USD28.15 as at 21 Jun 2018, Box Inc is trading at a Price to Sales Ratio of 7.1 times last 12 months sales.  This is a 26.0% premium to its historical average Price to Sales Ratio of 5.6 times.
Is the stock overvalued? One should not just look at one indicator to determine the fair value of a stock.
ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends.
While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued.
To find out more about our valuation methodology, click here. 
Source of Data: Price to Sales chart is from ProThinker Stock Report. Company description, historical financial statements data and price data are from gurufocus.com. Estimates are from gurufocus and/or 4-traders.com – Thomson Reuters.
Disclaimer: This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither ProThinker nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of ProThinker. Copyright(c) 2018. All rights reserved.

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