Although the cloud storage industry was growing before the COVID-19 pandemic, the hybrid work culture and digital transformation have boosted the demand for cloud storage solutions over the past 18 months. And with the COVID-19 omicron  variant now posing a threat, many companies are again delaying their return-to-office plans. Ford Motor Company (F) is the latest large company to do so. This trend could lead to increased demand for cloud storage solutions for the foreseeable future.

Furthermore,  the ease of access to massive data and proper organization of files from anywhere on any device could boost the cloud storage industry. According to a DIGITAL JOURNAL report, the global cloud storage market is expected to hit $353.81 billion by 2028, growing at a 24.5% CAGR.

Therefore, we think it could be wise to bet on cloud storage stocks Dropbox, Inc. (DBX) and Box, Inc. (BOX), which are well-positioned to generate significant ROI in the coming months.

Click here to check out our Cloud Computing Industry Report for 2021

Dropbox, Inc. (DBX)

San Francisco-based DBX provides a collaboration platform worldwide. The company’s solutions include Dropbox paper and doc scanners. With more than 700 million registered users across 180 countries, it aims to design a more enlightened way of working.

On November 4, DBX’s co-founder and CEO, Drew Houston, said, “Q3 was another solid quarter with record free cash flow, strong revenue growth, and great progress against our strategic objectives as we focus on delivering more value to our customers and shareholders. We shipped several new product experiences to help our customers with today’s challenges of distributed and remote work, and I’m confident in our future as we work toward our vision of building one organized place for content and all the workflows around it.”

For its fiscal third quarter, ended September 30, 2021, DBX’s revenue increased 12.9% year-over-year to $550.20 million. The company’s non-GAAP net income increased 33.5% year-over-year to $147.1 million. Also, its non-GAAP EPS came in at $0.37, up 42.3% year-over-year.

DBX’s revenue is expected to be $2.15 billion in its fiscal year 2021, representing a 12.4% year-over-year rise. The company’s EPS is expected to increase 60.2% year-over-year to $1.49 in the current year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 17.6% in price to close yesterday’s trading session at $23.93.

DBX’s strong fundamentals are reflected in its POWR Ratings system. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

In addition, it has an A grade for Quality and a B grade for Growth. DBX is ranked #10 out of 75 stocks in the Technology – Services industry. Click here to see the additional POWR Ratings for DBX (Value, Momentum, Stability, and Sentiment).

Box, Inc. (BOX)

BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. The Los Altos, Calif.-based concern has approximately 105,000 paying organizations, and its solution is offered in 25 languages and has 77.7 million registered users.

On November 30, Aaron Levie, the co-founder, and CEO of BOX, said, “In addition to our solid financial and customer metrics, we made meaningful product announcements in the third quarter, including the rollout of Box Sign globally, new malware deep scan capability in Box Shield to combat ransomware, and deeper integrations with Microsoft Office and Teams, Salesforce, Slack and Zoom. We believe Box’s leadership in the Content Cloud market is driving the acceleration of our growth and the expansion of our customer footprint.”

BOX’s revenues increased 14.3% year-over-year to $224.04 million for its fiscal third quarter, ended October 31, 2021. The company’s non-GAAP net income increased 8.7% year-over-year to $35.39 million. And  its non-GAAP EPS increased 10% year-over-year to $0.22.

Analysts expect BOX’s revenue to be $867.12 million in its fiscal 2022, representing a 12.5% year-over-year rise. The company’s EPS is expected to increase 31.3% year-over-year to $1.09 in the next year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 52.9% to close yesterday’s trading session at $25.88.

It is no surprise that BOX has an overall B rating, which equates to  a Buy in our POWR Rating system. It has a B grade for Growth, Value, and Quality. It is ranked #6 in the Technology – Services industry. Click here to see the additional POWR Ratings for Momentum, Stability, and Sentiment for BOX.

Click here to check out our Cloud Computing Industry Report for 2021

DBX shares were trading at $24.58 per share on Tuesday morning, up $0.65 (+2.72%). Year-to-date, DBX has gained 10.77%, versus a 26.52% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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