Will the Box IPO disrupt these 3 cloud stocks with encouraging sales trends?

Mary-Lynn Cesar, Kapitall: Do cloud stocks deserve a closer look before Box goes public?

Box is headed for an initial price offering (IPO). Talk of the cloud storage company going public has floated around since January, but now it’s official. Box — not to be confused with rival Dropbox, who is widely expected to go public this year — filed a prospectus for a $250 million offering on the NYSE Monday afternoon. 

[Read more from Kapitall: Will Ray Bans frames be enough to make Google Glass cool?]

The Wall Street Journal reports that the 9 year old company was most recently valued at $2.2 billion. Dropbox’s valuation stands at $10 billion.

According to the filing, Box’s revenue soared to $124.2 million in the fiscal year ending January 31. Revenue was $58.8 million just a year earlier. On the other hand, the California-based startup recorded $168.6 million in net losses this past January compared to $112.6 million a year ago.

The filing also names Box’s main competition within the cloud storage landscape: Citrix Systems (CTXS), Dropbox, EMC (EMC), Google (GOOG), IBM (IBM), and Microsoft (MSFT)“Many of our competitors and potential competitors are larger and have greater name recognition, much longer operating histories, larger marketing budgets and significantly greater resources than we do,” the filing states.

Investing Ideas

Cloud storage is big business; in fact, research firm MarketsandMarkets predicts that the industry will grow to $46.8 billion by 2018. So, drawing inspiration from Box's IPO filing, we looked for investment opportunities amongst cloud stocks. 

We began with a group of cloud stocks belonging to the  First Trust ISE Cloud Computing Index Fund (SKYY)

Given Box's impressive revenue growth over the past year, we decided to take a closer look at the revenue of our group of cloud stocks. Specifically, we screened for stocks experiencing  faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same period.

Revenue is the money a company makes through the sale of its goods and services. Accounts receivables is the portion of revenue a company has yet to receive for goods or services it has already provided. There's no guarantee that the company will ever get that money, so the less revenue attributable to receivables, the healthier the revenue. 

Click on the interactive chart to view data over time. 

1. Open Text Corp. ( OTEX, Earnings, Analysts, Financials): Develops, markets, sells, licenses, and supports enterprise content management (ECM) solutions primarily in North America and Europe.

Market cap at $5.71B, most recent closing price at $48.31.

Revenue grew by 3.22% during the most recent quarter ($363.51M vs. $352.18M y/y). Accounts receivable grew by -0.28% during the same time period ($187.4M vs. $187.92M y/y). Receivables, as a percentage of current assets, decreased from 30.58% to 24.6% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

 

 

2. F5 Networks, Inc. ( FFIV): Provides technology that optimizes the delivery of network-based applications, and the security, performance, and availability of servers, data storage devices, and other network resources in the Americas, EMEA, Japan, and the Asia Pacific.

Market cap at $8.74B, most recent closing price at $112.83.

Revenue grew by 11.22% during the most recent quarter ($406.45M vs. $365.45M y/y). Accounts receivable grew by 5.6% during the same time period ($220.78M vs. $209.08M y/y). Receivables, as a percentage of current assets, decreased from 26.41% to 25.35% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

 

 

3. Google Inc. ( GOOG): Operates as a global technology company that offers a web-based search engine in addition to developing products and providing services to organize information.

Market cap at $396.12B, most recent closing price at $1183.04.

Revenue grew by 16.92% during the most recent quarter ($16,858M vs. $14,419M y/y). Accounts receivable grew by 9.38% during the same time period ($9,390M vs. $8,585M y/y). Receivables, as a percentage of current assets, decreased from 14.2% to 12.88% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

(List compiled by Mary-Lynn Cesar, a Kapitall Writer. Accounting data sourced from Google Finance. Quarterly sales data sourced from Zack's Investment Research. All other data sourced from Finviz.)

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