Cloud Service Box Looks Boxed In; Buy Microsoft, Amazon or Google Instead

NEW YORK (TheStreet) -- Whether on public or private clouds, corporations are now more willing to make their data better accessible to both employees and their customers. It's not just for convenience. They also save money, thus boosting profits and, ultimately, their stock prices.

And whether newcomer Box (BOX), which offers a cloud-based collaboration platform, can make a dent in an industry dominated by behemoths Google (GOOGL) and Amazon (AMZN), remains to be seen.

After January's strong initial public offering, which saw BOX shares rise more than 40%, the Los Altos, Calif.-based company has seen its stock struggle, losing more than 24% over the past six months. With shares now trading around $17, Box is down almost 30% from its high of $24.73 reached on Jan. 23.

So ahead of the company's first-quarter fiscal 2016 earnings results Wednesday, there are several factors investors must consider before placing a long bet. And none of them suggests that shares will climb meaningfully in the near term.

Why? The company has spent money on multiple acquisitions recently, all of which will require time to create operational synergies. This is likely to prolong the period before Box starts making the money the market has bet that it will. And delays are not what investors should want from a company that posted annual sales of $216 million in the last fiscal year.

This means at around $17 per share, Box is currently valued at almost 10 times revenue, compared to, say, Microsoft (MSFT), which is valued at just four times revenue.

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