Box, Inc. (US:BOX) currently sits atop Fintel’s Quality + Fund Sentiment leaderboard. The share price of the cloud content management platform touched a five-year high of $33.35 at the beginning of February before pulling back to close at $27.36 on Friday.
The quant model combination of fund sentiment, or ownership, and quality, shows Fintel subscriber stocks that are suitable for long-term, patient investors who want maximum returns over the long term. The Quality + Fund Sentiment (QVO) leaderboard uses a reduced model to find high quality companies that are being accumulated by funds.
BOX stock has a score of 97.87, the highest among U.S. equities. It also has an Ownership Score of 91.46 and a Quality Score of 95.37.
Founded in 2005, Box simplifies work and collaboration for leading organizations globally, including AstraZeneca (US:AZN), General Electric (US:GE) and Morgan Stanley (US:MS). Box is headquartered in Redwood City, California, with offices across the United States, Europe and Asia.
Let’s dive into the factors supporting a bullish thesis on BOX shares going into the new trading week.
Options Ratio
The first factor supporting a bullish BOX thesis is its put/call ratio, which is 0.44. That number places BOX in the top 3% of companies with the most optimistic put/call ratios. It can be said that an average put/call ratio of 0.7 for equities is considered a good basis for the purpose of evaluating investors’ sentiment.
The put/call ratio is a measurement tool in investing that is very helpful to gauge the overall mood of a financial market. A put option is a right to sell an asset at a predetermined price. A call option is a right to buy an asset at a predetermined price. By combining the total number of put and call options as a ratio traders and investors can evaluate the level of sentiment for any specific stock.
In the scenario that traders are buying more puts than calls, this is a strong signal that shows a clear bearish sentiment. On the other hand, If traders are buying more calls than puts, this suggests that they anticipate a bull market.
The put/call ratio for BOX stock declined from 0.72 on March 16, 2023, to as low as 0.38 on April 6, 2023. This decline has been fully reflected in the stock price that gained 6.52% over the past month. However the stock is down nearly 12.5% year-to-date, most of that decline experienced in the last 12 months.
Long Institutions
Institutional ownership is the second factor supporting a bullish thesis.
Data compiled by Fintel shows that out of 735 total Institutional Owners, 720 are 720 long only, 3 are short only, and a dozen are long/short. These institutions hold a total of 145,24 million shares.
The largest shareholders include Vanguard Group Inc, BlackRock Inc., Earnest Partners. Specific funds include Vanguard Total Stock Market Index Fund (US:VTSMX) and iShares Russell 2000 ETF (US:IWM).
That Fund Sentiment Score of 91.46 show BOX is among the stocks being most bought by funds. That score ranks the shares at number 995 out of 36,339 stocks analyzed. The score is generated using a sophisticated, multi-factor quantitative model that identifies companies with the highest levels of institutional accumulation.
The scoring model uses a combination of the total increase in disclosed owners, the changes in portfolio allocations in those owners and other metrics. The number ranges from 0 to 100, with higher numbers indicating a higher level of accumulation to its peers, and 50 being the average.
What is also evident on the dashboard is that BOX stock shows a clear accumulation trend, a very bullish sign for patient long-term investors.
Inflection Point
At the end of October, Box reached an inflection point, finally turnikng profitable after a series of net losses. What is very positive is the trend in Cash From Operating Activities, which it started to increase in January 2020. For the quarter ended Jan. 31, 2023, that cash metric reached $298 million, the highest quartely number in the last four years.
The fourth-quarter 2023 and full-year 2023 financial results were strong, with the full-year showing record numbers for revenue, at $991 million; operating income, at $37 million; and, net income, at $27 million.
Those strong Q4 and FY 2023 results came as the content storage platform hit a $1 billion annual revenue run rate on a quarterly basis and significantly expanded its operating margins, both of which will be key catalysts for higher stock prices.
“Operational excellence and a sharp focus on our bottom line allowed us to deliver a combined revenue growth plus free cash flow margin outcome in fiscal 2023, up significantly year-over-year,” said Dylan Smith, co-founder and CFO of Box. “It is clear our multi-year effort to lower our cost structure while investing to drive durable, long-term growth is enabling us to deliver a continued healthy balance of growth and profitability in FY24 and beyond.”
Smith, by the way, holds 1.53 million shares of the company’s stock, according to his latest SEC filing.
As a result, on Fintel’s dashboard, the shares of Box have a Quality Score of 95.37, ranking it at 150 out of 12,091 stocks analyzed in this metric. That score reflects a company that ranks high in generating cash.
Top Employer
The fourth factor supporting our thesis is how Box’s rank-and-file view the company, the strongest measure of which is its earning the number 27 spot among Fortune’s 100 best companies to work for in 2023.
That’s on top of the company’s ‘medium’, or 23.9, risk rating on environmental, social, and corporate governance, ranking it at number 635 among 1,098 industry peers by Sustainalytics.
Clearly, Box has a lot of positive momentum now that can lead to higher stock prices and reward patient long-term investors.
This story originally appeared on Fintel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
