Shares of Box Fall 8% on Weak Earnings and Outlook, Is It Time to Sell Though?

Box Inc. (BOX) shared fiscal third-quarter earnings alongside sales guidance for the remainder of the year late Tuesday that left much to be desired in the eyes of investors. 

A corresponding sell-off sent shares more than 13% lower in extended trading. They’ve settled at around an 8% loss so far this Wednesday morning.

The company reported somewhat underwhelming results for the third quarter, falling just shy of what analysts were looking for. Adjusted earnings of 36 cents per share was under the FactSet consensus of 38 cents per share. 

Meanwhile, revenue of $261.5 million did represent a 5% improvement year over year. Again, though, this performance fell just short of the FactSet consensus of $262 million.

Net income of $10.7 million (4 cents per share) was a slight improvement year over year compared to $9.9 million (3 cents per share) in 2022. 

But, the real concern is in regard to the forecast for the rest of the year. Box issued sales guidance between $1.037 billion to $1.039 billion for fiscal 2023. Even at the high end of that projection, the company is poised to come in short of the FactSet consensus of $1.043 billion.

Chief Executive Aaron Levie says that a challenging economic climate is impacting sales, particularly in Europe. The company is going all in on its Box AI and Box Hubs products, as these will empower consumers to automate workflows and gain data insights with just a few clicks.

While some big deals have already surfaced with the likes of the U.S. Air Force, Bose, and the U.S. Department of Health and Human Services, it hasn’t been enough in the eyes of analysts and investors alike. BOX has now fallen more than 14% this year.

So, is this your sign to get out of BOX if you’re a current shareholder? Or, should you be patient and weather the storm? We’ve taken a look through the VectorVest stock analysis software and found 3 things that will help you make your next move with confidence.

Despite Lackluster Earnings and Guidance, BOX Has Excellent Upside Potential With Fair Safety and Timing

VectorVest empowers you to save time and eliminate stress while winning more trades. The proprietary stock rating system gives you clear, actionable insights in just 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each rating is placed on its own scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. Better yet, you’re offered a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we discovered for BOX:

• Excellent Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection) to AAA corporate bond rates and risk. This offers much better insight than a simple comparison of price to value alone. BOX has an excellent RV rating of 1.47 right now. The stock is undervalued with a current value of $38.31.
• Fair Safety: The RS rating is an indicator of risk. It’s calculated through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. BOX is a fairly safe stock with an RS rating just below the average at 0.90.
• Fair Timing: Even though the stock is down more than 8% today, BOX has fair timing with an RT rating of 0.86. That being said, if the stock continues its current trajectory, this rating will quickly turn poor. It’s based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 1.08 is considered fair for BOX, and the stock is currently rated a HOLD in the VectorVest system. 

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VectorVest advocates buying safe, undervalued stocks, rising in price. BOX disappointed with weak earnings for the third quarter and downtrodden guidance for fiscal 2023. The stock fell 8% as a result, but still has excellent upside potential, fair safety, and fair timing.

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