The future of the tech industry looks promising due to the growing demand for advanced solutions in cloud content management, enterprise analytics, and customer support. As businesses continue to embrace digital transformation, the need for specialized tech hardware and advanced analytics tools is further boosting sales and optimism in the tech market.
Against this favorable backdrop, investors might consider investing in undervalued tech stocks such as Box, Inc. (BOX), Teradata Corporation (TDC), and AstroNova, Inc. (ALOT), which have strong fundamentals.
The tech industry's growth is driven by advancements in AI, IoT, and cloud computing. These innovations enhance efficiency and drive progress, especially in hybrid work environments that demand improved collaboration, data management, and reporting services. With IT services spending expected to rise by 7.1% this year to $1.61 trillion, the sector presents a compelling investment opportunity.
Similarly, the demand for high-quality hardware, such as digital printing solutions, labeling systems, and data acquisition systems, is driven by increasing workloads across industries, complex processing demands, and customer engagement. Due to this demand for robust electronics to ensure optimal functionality, the IT hardware market is expected to grow at a 7.9% CAGR, reaching $191.03 billion by 2029.
Considering these conducive trends, let’s assess the fundamentals of the three abovementioned tech picks.
Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. It serves financial services, health care, government, and legal services industries internationally.
On August 8, 2024, BOX announced its acquisition of Alphamoon's AI-powered document processing technology, strengthening its Intelligent Content Management platform. This enhances BOX's ability to automate document tasks and extract metadata using advanced OCR and language models.
On August 6, 2024, BOX announced that its AI platform now offers unlimited queries for Enterprise Plus customers. Major Japanese companies like Asahi Group, The Norinchukin Bank, and Hitachi High-Tech are using it company-wide to better manage and utilize unstructured data with generative AI.
In terms of forward non-GAAP P/E, BOX’s 19.69x is 15.8% lower than the 23.39x industry average. Its 17.33x forward EV/EBIT is 10.3% lower than the 19.31x industry average.
BOX’s revenues for the second quarter ended July 31, 2024, increased 3.3% year-over-year to $270.04 million. Its non-GAAP gross profit increased 9.5% year-over-year to $220.24 million. The company’s non-GAAP operating income increased 18.5% year-over-year to $76.69 million.
Additionally, its non-GAAP attributable net income increased 18.3% year-over-year to $64.74 million. Its non-GAAP attributable net income per share increased 22.2% year-over-year to $0.44.
Street expects BOX’s EPS and revenue for the quarter ending October 31, 2024, to increase 17.4% and 5.2% year-over-year to $0.42 and $275.10 million, respectively. BOX surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 34.1% to close the last trading session at $32.89.
BOX’s POWR Ratings reflect robust prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #4 out of 75 stocks in the Technology – Services industry. It has an A grade for Growth and Quality and a B for Value. Click here to see BOX’s Momentum, Stability, and Sentiment ratings.
Teradata Corporation (TDC)
TDC provides a connected multi-cloud data platform for enterprise analytics. The company offers Teradata Vantage, a data platform that allows companies to leverage their data across an enterprise, as well as connects various sources of data to drive ecosystem simplification and support customers on their journey to the cloud through an integrated migration.
On August 12, 2024, TDC announced its partnership with the Los Angeles Clippers and their new arena, Intuit Dome, as the official cloud analytics provider. TDC will deliver cloud analytics and AI technologies to enhance the fan experience and is a Founding Partner of Intuit Dome.
On July 16, 2024, TDC announced its integration with DataRobot, combining the DataRobot AI Platform with TDC’s VantageCloud and ClearScape Analytics. This partnership aims to enhance AI capabilities for enterprises, offering greater flexibility and scalability for deploying AI models.
In terms of forward EV/EBIT, TDC’s 8.69x is 55% lower than the 19.31x industry average. Similarly, its 12.40x forward non-GAAP P/E is 47% lower than the 23.39x industry average. Also, its 1.49x forward non-GAAP PEG is 17.6% lower than the 1.81x industry average.
TDC’s total revenues for the second quarter ended June 30, 2024, were $436 million. Its non-GAAP operating income was $96 million, up 33.3% year-over-year. Similarly, the company’s non-GAAP net income and non-GAAP EPS increased by 26.5% and 33.3%, respectively, from the year-ago values, reaching $62 million and $0.64.
For the quarter ending September 30, 2024, TDC’s EPS is expected to increase 33.7% year-over-year to $0.56. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 7.6% to close the last trading session at $27.78.
TDC’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and Quality and a B for Growth and Sentiment. Within the Technology – Services industry, it is ranked #3. To access the additional POWR Ratings of TDC for Momentum and Stability, click here.
AstroNova, Inc. (ALOT)
ALOT designs, develops, manufactures, and distributes specialty printers and data acquisition and analysis systems in the United States, Europe, Asia, Canada, Central and South America, and internationally. The company operates in two segments, Product Identification (PI) and Test & Measurement (T&M).
On June 5, 2024, ALOT and its newly acquired MTEX NS subsidiary showcased innovative printing technologies at Drupa 2024. The new solutions include advancements in label, packaging, and flexible packaging printing, reflecting their strengthened position in the digital printing market.
In terms of the trailing-12-month EV/Sales, ALOT’s 0.85x is 71.7% lower than the 3.01x industry average. Its 11.02x trailing-12-month EV/EBIT is 56% lower than the 25.08x industry average. Likewise, its 8.07x trailing-12-month EV/EBIT is 54.5% lower than the 17.74x industry average.
ALOT’s total revenue for the first quarter ended April 27, 2024, was $32.96 million. Its non-GAAP gross profit was $11.97 million. Moreover, the company’s non-GAAP net income was $1.18 million, or $0.15 per common share, representing an increase of 39.3% and 36.4% year-over-year, respectively.
Over the past year, ALOT’s stock has gained 15.7% to close the last trading session at $14.85.
ALOT’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
ALOT is ranked #9 out of 40 stocks in the Technology – Hardware industry. It has an A grade for Value and a B for Sentiment. To see ALOT’s Growth, Momentum, Stability, and Quality, click here.
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BOX shares were trading at $33.18 per share on Friday afternoon, up $0.29 (+0.88%). Year-to-date, BOX has gained 29.56%, versus a 18.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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