You should always think about risks though. Big growth can make big winners, so the writing on the wall tells us that Dropbox is worth considering carefully. The sharp increase in earnings could signal good business momentum. The cherry on top is that insiders own a bucket-load of shares, and the CEO pay seems really quite reasonable. Should You Add Dropbox To Your Watchlist?ĭropbox's earnings per share growth have been climbing higher at an appreciable rate. To see the actual numbers, click on the chart. The chart below shows how the company's bottom and top lines have progressed over time. While we note Dropbox achieved similar EBIT margins to last year, revenue grew by a solid 7.7% to US$2.3b. It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. It's not often a company can achieve year-on-year growth of 81%. Outstandingly, Dropbox's EPS shot from US$0.87 to US$1.56, over the last year. As a result, we'll zoom in on growth over the last year, instead. In the last three years Dropbox's earnings per share took off so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. View our latest analysis for Dropbox Dropbox's Improving Profits Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Dropbox with the means to add long-term value to shareholders. So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Dropbox ( NASDAQ:DBX). Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit.
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