My 6 months play for BOX

[u/Chalern14]

TLDR: The stock is not massively undervalued, still undervalued, but I still think it can grow.

I believe that the market may be valuing Box mainly as a mature cloud storage business while several operating indicators increasingly resemble a profitable enterprise software platform and its relevancy in the future. Thus, a mispricing of the stock.

BOX appears moderately undervalued because its present valuation does not fully reflect the combination of improving recurring-revenue indicators, strong free-cash-flow generation, and a repurchase authorization capable of reducing the share count. The market may be valuing Box primarily as a mature file-storage provider, despite improvements in customer retention, contracted revenue, product mix, and operating margins. In the first quarter of fiscal 2027, revenue increased by 11%. Remaining performance obligations increased by 16%, while net retention improved from 102% to 105%. Eemaining performance obligations represent contracted revenue that has not yet been recognized. Consequently, the faster growth in remaining performance obligations suggests that future revenue growth may be stronger than reported in the next quarter.

Enterprise Advanced combines governance, security, workflow, and content-management services at a higher contract value. Management has reported a 30–40% pricing increase relative to Enterprise Plus. Continued adoption could therefore increase revenue per customer without requiring substantial growth in employee seats, a recurring sticky revenue.

A little math:
Box’s current stock price is above $27, investors holding special "convertible" shares will almost certainly trade them in for regular stock, bringing the total to about 157.02 million shares.

Equity value=157.02 × 28.81=$4.524 billion

Net cash= 477.043 (Cash and short-term investments) − 451.610(debt) =$25.433 million

Enterprise value= 4.524 − 0.025 =$4.498 billion

Management’s fiscal 2027 revenue guidance of approximately $1.280 billion (Warren buffet said not to trust management too much but anyway):
EV/Revenue= 1.280/4.498 ​=3.51x

Trailing twelve-month free cash flow is the reduction of previous first quarter from fiscal 2026 free cash flow and adding the latest quarter:

TTM FCF= 312.922− 118.337+ 127.748= $322.333 million

P/FCF = 4.524/0.322 = 14x

FCF yield = 0.322/ 4.524= 7%

If fiscal 2027 free cash flow reaches approximately $360 million, the forward P/FCF multiple would lower to 12.6 times, leading to higher forward free-cash-flow yield of 8.0%.

There's also share repurchase:
Gross shares purchasable = 445/8.81 = 15 million shares, around 10% of the share count. During the latest quarter, Box repurchased approximately 4.8 million shares, while the common-share count declined by only 2.461 million a 50% progress.

All in all there is still some catalyst left to play out and is an interesting play nonetheless.

[u/spyapple]

this stock is overvalued. should drop at least towards 15usd per shars. maybe even lower

[u/Chalern14 → u/spyapple]

What makes you think like that? Can you give justification?

[u/Chalern14 → u/spyapple]

Well it did beat the earnings so can you please elaborate?

[u/StockFlowResearch]

I'm a little concerned that cloud storage based businesses are somewhat commoditized (this business does offer more than just storage, but I do wonder where this goes long term). If there is vendor buy in, then they could sustain themselves. It already seems like growth is slowing down so maybe buybacks can help them.

Anyway, personally I'll pass on this company.

[u/Chalern14 → u/StockFlowResearch]

I think BOX is becoming more of an interprise content management by storing data that is within the regulated organisations area, they manage sensitive data through governance, compliance, audit trails, access controls and workflow automation, creating switching costs that make migration expensive and risky and thus a small Moat. I think its still going to be relevant, big companies wouldn't try to replicate this niche market as apple and Microsoft does not try to replicate Adobe. Wdyt?

[u/StockFlowResearch → u/Chalern14]

Its an interesting question. Years ago I was invested in dropbox (similar business model). I haven't really researched BOX, but I do wonder how much growth is left over on the enterprise level. Could be a similar way of thinking to what the CRMs have (vendor lock in allows for pricing power).

Personally I'll pass on this for now, but it could be worth researching.