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Dropbox (DBX) Outpaces Stock Market Gains: What You Should Know

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Dropbox (DBX - Free Report) closed at $24.98 in the latest trading session, marking a +0.64% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.62%. Elsewhere, the Dow gained 0.55%, while the tech-heavy Nasdaq lost 0.03%.

Coming into today, shares of the online file-sharing company had gained 1.83% in the past month. In that same time, the Computer and Technology sector gained 0.29%, while the S&P 500 gained 0.87%.

Dropbox will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.37, up 32.14% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $557.66 million, up 10.62% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.49 per share and revenue of $2.15 billion, which would represent changes of +60.22% and +12.34%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Dropbox. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Dropbox is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, Dropbox is currently trading at a Forward P/E ratio of 16.76. This valuation marks a discount compared to its industry's average Forward P/E of 26.34.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 168, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow DBX in the coming trading sessions, be sure to utilize Zacks.com.


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