Comparing Smartsheet (NYSE:SMAR) & Zuora (NYSE:ZUO)

Smartsheet (NYSE:SMAR) and Zuora (NYSE:ZUO) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Profitability

This table compares Smartsheet and Zuora’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Smartsheet -30.04% -34.42% -18.68%
Zuora -31.80% -47.50% -25.39%

Volatility and Risk

Smartsheet has a beta of 2.02, suggesting that its share price is 102% more volatile than the S&P 500. Comparatively, Zuora has a beta of 1.97, suggesting that its share price is 97% more volatile than the S&P 500.

Earnings and Valuation

This table compares Smartsheet and Zuora’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Smartsheet $177.72 million 31.68 -$53.88 million ($0.62) -85.23
Zuora $235.20 million 7.77 -$77.59 million ($0.82) -20.06

Smartsheet has higher earnings, but lower revenue than Zuora. Smartsheet is trading at a lower price-to-earnings ratio than Zuora, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

56.6% of Smartsheet shares are held by institutional investors. Comparatively, 37.6% of Zuora shares are held by institutional investors. 24.7% of Smartsheet shares are held by company insiders. Comparatively, 26.0% of Zuora shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Smartsheet and Zuora, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Smartsheet 0 1 9 0 2.90
Zuora 1 1 4 0 2.50

Smartsheet currently has a consensus target price of $51.20, indicating a potential downside of 3.10%. Zuora has a consensus target price of $18.91, indicating a potential upside of 14.95%. Given Zuora’s higher probable upside, analysts clearly believe Zuora is more favorable than Smartsheet.

Summary

Smartsheet beats Zuora on 10 of the 14 factors compared between the two stocks.

About Smartsheet

Smartsheet, Inc. engages in managing and automating collaborative work. Its platform provides solutions that eliminate the obstacles to capturing information, including a familiar and intuitive spreadsheet interface as well as easily customizable forms. The company was founded by W. Eric Browne, Maria Colacurcio, John D. Creason and Brent R. Frei in June 2005 and is headquartered in Bellevue, WA.

About Zuora

Zuora, Inc. provides cloud-based software on a subscription basis that enables companies in various industries to launch, manage, and transform into a subscription business. The company offers Zuora Central platform that acts as an intelligent subscription management hub that automates the subscription order-to-cash process, including quoting, billing, collections, analytics, and revenue recognition. Its products include Zuora Billing, Zuora RevPro, Zuora CPQ, Zuora Insights, and Zuora Collect. Zuora, Inc. sells its products through its direct sales force and with GSI partners to various industries comprising software, hardware, media, transportation, construction, healthcare, education, retail, Internet of Things, and others worldwide. The company was incorporated in 2006 and is headquartered in San Mateo, California.

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