Box currently trades at $31.32 per share and has shown little upside over the past six months, posting a small loss of 3.3%.

Is now the time to buy Box, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

We're cautious about Box. Here are three reasons why there are better opportunities than BOX and a stock we'd rather own.

Why Is Box Not Exciting?

Founded in 2005 by Aaron Levie and Dylan Smith, Box (NYSE:BOX) provides organizations with software to securely store, share and collaborate around work documents in the cloud.

1. Long-Term Revenue Growth Disappoints

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Box grew its sales at a weak 7.6% compounded annual growth rate. This was below our standard for the software sector.

2. Weak Billings Point to Soft Demand

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Box’s billings came in at $398.6 million in Q4, and over the last four quarters, its year-on-year growth averaged 4.7%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers.

3. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Box’s revenue to rise by 6%, a slight deceleration versus its 7.6% annualized growth for the past three years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

Final Judgment

Box’s business quality ultimately falls short of our standards. That said, the stock currently trades at 4× forward price-to-sales (or $31.32 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now. We’d suggest looking at one of Charlie Munger’s all-time favorite businesses.

Stocks We Like More Than Box

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.