Critical Analysis: Infosys (INFY) versus RealNetworks (RNWK)

Infosys (NASDAQ: RNWK) and RealNetworks (NASDAQ:RNWK) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Volatility and Risk

Infosys has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, RealNetworks has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500.

Profitability

This table compares Infosys and RealNetworks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Infosys 22.30% 23.22% 18.66%
RealNetworks -18.52% -26.75% -18.60%

Dividends

Infosys pays an annual dividend of $0.58 per share and has a dividend yield of 2.8%. RealNetworks does not pay a dividend. Infosys pays out 57.4% of its earnings in the form of a dividend. Infosys has raised its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and price targets for Infosys and RealNetworks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Infosys 3 8 4 0 2.07
RealNetworks 0 0 0 0 N/A

Infosys currently has a consensus price target of $16.65, indicating a potential downside of 18.95%. Given Infosys’ higher probable upside, equities research analysts plainly believe Infosys is more favorable than RealNetworks.

Institutional & Insider Ownership

17.6% of Infosys shares are owned by institutional investors. Comparatively, 51.1% of RealNetworks shares are owned by institutional investors. 22.4% of Infosys shares are owned by company insiders. Comparatively, 39.5% of RealNetworks shares are owned 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.

Valuation & Earnings

This table compares Infosys and RealNetworks’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Infosys $10.94 billion 4.08 $2.49 billion $1.01 20.34
RealNetworks $78.72 million 1.61 -$16.30 million N/A N/A

Infosys has higher revenue and earnings than RealNetworks.

Summary

Infosys beats RealNetworks on 11 of the 14 factors compared between the two stocks.

Infosys Company Profile

Infosys Limited, together with its subsidiaries, provides consulting, technology, and outsourcing services in North America, Europe, India, and internationally. It provides business information technology services, including application development and maintenance, independent validation, infrastructure management, and business process management services, as well as engineering services, such as engineering and life cycle solutions; and consulting and systems integration services comprising consulting, enterprise solutions, systems integration, and advanced technologies. The company's products include Finacle, a banking solution that provides analytics, core banking, consumer e-banking, corporate e-banking, Islamic banking, mobile banking, origination, payments, SME enable, treasury, wealth management, and youth banking solutions. Its products also comprise Infosys Nia, a knowledge-based AI platform; Infosys Information Platform, an analytics platform that enables to get insights from various data sources for decisions across industries; and AssistEdge, CreditFinanceEdge, ProcureEdge, and TradeEdge that are cloud-hosted business platforms, as well as analytics, cloud, and digital transformation services. The company serves clients in the financial services, life sciences, healthcare and insurance, manufacturing, retail, consumer packaged goods and logistics, hi-tech, communications, services, utilities, resources, energy, and other industries. The company was formerly known as Infosys Technologies Limited and changed its name to Infosys Limited in June 2011. Infosys Limited was founded in 1981 and is headquartered in Bengaluru, India.

RealNetworks Company Profile

RealNetworks, Inc. provides network-delivered digital media applications and services to manage, play, and share digital media. Its Consumer Media segment offers RealPlayer media player software, which enables consumers to discover, play, download, manage and edit digital video, stream audio and video, download and save photos and videos from the Web, transfer and share content on social networks, and edit their own photo and video content. This segment also licenses its technology to electronic equipment, microchip, and integrated circuit manufacturers. The company's Mobile Services segment provides digital media services to mobile and online service providers as software as a service offerings, which include RealTimes, a photo and video sharing platform, offers to wireless carriers for integration in their hosted cloud solutions; Kontxt, a text message management, anti-spam, and classification product; ringback tone that enables callers to hear subscriber-selected music or messages instead of the traditional electronic ringing; intercarrier messaging services; and business intelligence, and subscriber management and billing for the carriers. Its Games segment develops, publishes, and distributes casual games, including time-management, board, card, puzzle, word, and hidden-object games. It offers its casual games through mobile devices, digital downloads, and subscription play. The company also develops and markets software products and services that enable the creation, distribution, and consumption of digital media, including audio and video. The company provides its products and services through direct and indirect channels comprising public relations, trade shows, events, and speaking opportunities; online channels; third party distribution partners; and third-party distribution channels, such as application storefronts, search engines, online portals, and content publishers. RealNetworks, Inc. was founded in 1994 and is headquartered in Seattle, Washington.

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