Box stock price has retreated in the past few months as the company has slowed and competition in the core market has risen. It was trading at $31 on Friday, down by 12% from its highest level this year, as focus shifts to the upcoming earnings.
Box growth has stalled
Box is a technology company that provides cloud file storage solutions to customers worldwide.
The company has expanded its business in the past few years. For example, it has invested heavily in artificial intelligence (AI) tools like content management, AI agents, and e-signatures.
Box’s business has slowed in the past few years, with its annual revenue growing from $770 million in 2021 to $1.09 billion last year. While a 41% growth is a good one, it is much slower than other companies in the software-as-a-service industry.
Box’s main challenge is that it operates in a highly competitive industry. It competes with companies like DropBox, Amazon, Google, and Microsoft, which offer mostly similar solutions.
Many large companies prefer to use one cloud software provider. As such, a company paying for Google Cloud solutions will prefer its Drive solution for storage and sharing solutions.
Earnings ahead
The next key catalyst for the Box stock price will be the upcoming earnings, which will shed color on its business trajectory.
The most recent results showed that Box’s revenue rose to $280 million in the fourth quarter of its 2025 fiscal year. It also expanded its gross margin to 81% from 78.4% in the same period last year.
Analysts expect that Box’s revenue will be $274.4 million, up by 3.8% from the same period last year. The most optimistic analyst see the revenue coming in at $276 million.
Its earnings per share (EPS) is expected to come in at 26 cents, down from 39 cents a year earlier.
For the year, analysts anticipate that Box’s revenue will come in at $1.15 billion, up by 5.70% from last year. It will then get to $1.23 billion next year.
Is Box overvalued or cheap?
A key concern among investors is that Box is relatively overvalued for a company whose business has largely stalled or matured.
Box has a forward P/E ratio of 26, higher than the S&P 500 Index’s average of 21 even though the index has a faster growth rate. FactSet data shows that the S&P 500 Index had a blended earnings growth rate of 13% in the first quarter. It has a forward EV-to-EBITDA multiple of 13.70, higher than the sector median of 12.
A good approach for valuing Box is to use the rule-of-40 approach, which compares its growth and margins. The most recent data showed that its revenue growth is about 5%, while its operating margin was 28%, giving it a rule of 40 metric of 33%.
Box has a free cash flow margin of 28%, meaning that its rule-of-40 metric using this approach is also 33%. A rule of 40 figure of less than 40 is a sign that a company is prioritizing growth over profitability.
Box stock price technical analysis
The daily chart shows that the Box share price peaked at $35.75 in December last year. It formed a double-top pattern at that level with a neckline at $30.56.
Box shares have moved slightly below the 50-day moving average. They have also formed a head and shoulders pattern, a popular bearish sign.
Therefore, the stock will likely have a bearish breakout after its earnings. If this happens, the next point to watch will be at $31. A move above the resistance level at $32.48 will invalidate the bearish outlook.
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