Critical Review: Dropbox (DBX) and The Competition

Dropbox (NASDAQ:DBX) is one of 953 publicly-traded companies in the “Software” industry, but how does it contrast to its rivals? We will compare Dropbox to related companies based on the strength of its dividends, institutional ownership, valuation, profitability, risk, analyst recommendations and earnings.

Valuation & Earnings

This table compares Dropbox and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Dropbox	$2.52 billion	$508.40 million	19.87
Dropbox Competitors	$1.85 billion	$386.01 million	106.80

Dropbox has higher revenue and earnings than its rivals. Dropbox is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Volatility and Risk

Dropbox has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Dropbox’s rivals have a beta of 1.34, indicating that their average share price is 34% more volatile than the S&P 500.

Profitability

This table compares Dropbox and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dropbox	17.49%	-24.26%	15.88%
Dropbox Competitors	-612.41%	21.13%	-8.86%

Insider & Institutional Ownership

94.8% of Dropbox shares are owned by institutional investors. Comparatively, 41.8% of shares of all “Software” companies are owned by institutional investors. 35.5% of Dropbox shares are owned by insiders. Comparatively, 19.9% of shares of all “Software” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Dropbox and its rivals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dropbox	3	4	2	0	1.89
Dropbox Competitors	5734	21488	44819	1493	2.57

Dropbox currently has a consensus price target of $31.60, suggesting a potential downside of 11.63%. As a group, “Software” companies have a potential upside of 27.96%. Given Dropbox’s rivals stronger consensus rating and higher possible upside, analysts plainly believe Dropbox has less favorable growth aspects than its rivals.

Summary

Dropbox rivals beat Dropbox on 7 of the 13 factors compared.

Dropbox Company Profile

Dropbox, Inc. provides a content collaboration platform worldwide. The company's platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was incorporated in 2007 and is headquartered in San Francisco, California.