Analyzing Dropbox (NASDAQ:DBX) and Square (NASDAQ:SQ)

Dropbox (NASDAQ:DBX) and Square (NYSE:SQ) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitability, risk, institutional ownership and valuation.

Earnings & Valuation

This table compares Dropbox and Square’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dropbox $1.66 billion 5.66 -$52.70 million N/A N/A
Square $4.71 billion 12.10 $375.45 million $0.17 763.82

Square has higher revenue and earnings than Dropbox.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Dropbox and Square, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dropbox 2 2 10 0 2.57
Square 5 20 17 0 2.29

Dropbox currently has a consensus target price of $27.15, indicating a potential upside of 19.36%. Square has a consensus target price of $82.15, indicating a potential downside of 36.73%. Given Dropbox’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Dropbox is more favorable than Square.

Volatility and Risk

Dropbox has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Square has a beta of 2.69, indicating that its stock price is 169% more volatile than the S&P 500.

Profitability

This table compares Dropbox and Square’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dropbox -0.33% 1.98% 0.60%
Square 5.99% 0.44% 0.14%

Insider and Institutional Ownership

47.1% of Dropbox shares are held by institutional investors. Comparatively, 62.7% of Square shares are held by institutional investors. 30.8% of Dropbox shares are held by company insiders. Comparatively, 21.8% of Square shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Square beats Dropbox on 8 of the 13 factors compared between the two stocks.

About Dropbox

Dropbox, Inc. provides a collaboration platform worldwide. Its platform allows individuals, teams, and organizations to collaborate and sign up for free through its Website or app, as well as upgrade to a paid subscription plan for premium features. The company has approximately 500 million registered users across 180 countries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was founded in 2007 and is headquartered in San Francisco, California.

About Square

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions. It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts EMV® chip cards and Near Field Communication payments; Chip card reader, which accepts EMV® chip cards and enables swiped transactions of magnetic stripe cards; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions. The company also provides Square Point of Sale software; Cash App, which provides access to the financial system, allowing customers to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup and delivery, to their customers; and Square Capital that facilitates loans to sellers based on real-time payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.

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