Typically it's companies that have been around for longer that pay dividends (Dropbox had its IPO on 23 March 2018). We're not expecting Dropbox to pay a dividend over the next 12 months. To put that into context you can compare it against similar companies.
The EBITDA is a measure of a Dropbox's overall financial performance and is widely used to measure a its profitability. However, it's sensible to consider Dropbox's PEG ratio in relation to those of similar companies.ĭropbox's EBITDA (earnings before interest, taxes, depreciation and amortisation) is $501.1 million (£0.0 million).
By accounting for growth, it could also help you if you're comparing the share prices of multiple high-growth companies. The PEG ratio provides a broader view than just the P/E ratio, as it gives more insight into Dropbox's future profitability. A PEG ratio over 1 can be interpreted as meaning shares are overvalued at the current rate of growth, or may anticipate an acceleration in growth. However, Dropbox's P/E ratio is best considered in relation to those of others within the software-infrastructure industry or those of similar companies.ĭropbox's "price/earnings-to-growth ratio" can be calculated by dividing its P/E ratio by its growth – to give 2.2864. The low P/E ratio could mean that investors are pessimistic about the outlook for the shares or simply that they're under-valued. That's relatively low compared to, say, the trailing 12-month P/E ratio for the NASDAQ 100 at the end of 2019 (27.29). In other words, Dropbox shares trade at around 24x recent earnings. P/E ratioĭropbox's current share price divided by its per-share earnings (EPS) over a 12-month period gives a "trailing price/earnings ratio" of roughly 24x. However, analysts commonly use some key metrics to help gauge value. Valuing a stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of overall performance. If you’re not sure which investments are right for you, please seek out a financial adviser. Past performance is no guarantee of future results. The value of your investments can go up and down, and you may get back less than you invest.
All investing should be regarded as longer term.
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