Palo Alto Networks (NYSE: PANW) and Mimecast (NASDAQ:MIME) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Volatility and Risk

Palo Alto Networks has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Mimecast has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Palo Alto Networks and Mimecast, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Palo Alto Networks 1 8 32 0 2.76
Mimecast 0 1 12 0 2.92

Palo Alto Networks presently has a consensus price target of $163.74, indicating a potential upside of 14.59%. Mimecast has a consensus price target of $32.83, indicating a potential upside of 18.06%. Given Mimecast’s stronger consensus rating and higher probable upside, analysts clearly believe Mimecast is more favorable than Palo Alto Networks.

Insider and Institutional Ownership

80.0% of Palo Alto Networks shares are held by institutional investors. Comparatively, 58.7% of Mimecast shares are held by institutional investors. 4.8% of Palo Alto Networks shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Palo Alto Networks and Mimecast’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Palo Alto Networks $1.76 billion 7.45 -$216.60 million ($2.46) -58.09
Mimecast $186.56 million 8.54 -$5.44 million ($0.16) -173.81

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

Profitability

This table compares Palo Alto Networks and Mimecast’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Palo Alto Networks -11.97% -15.77% -3.67%
Mimecast -4.16% -11.28% -4.30%

Summary

Mimecast beats Palo Alto Networks on 7 of the 13 factors compared between the two stocks.

About Palo Alto Networks

Palo Alto Networks, Inc. offers a next-generation security platform. The Company’s security platform consists of three elements: Next-Generation Firewall, Advanced Endpoint Protection and Threat Intelligence Cloud. Its Next-Generation Firewall delivers application, user and content visibility and control, as well as protection against network-based cyber threats integrated within the firewall through its hardware and software architecture. Its Advanced Endpoint Protection prevents cyber attacks that run malicious code or exploit software vulnerabilities on a range of fixed and virtual endpoints and servers. Its Threat Intelligence Cloud provides central intelligence capabilities, security for software as a service applications and automated delivery of preventative measures against cyber attacks. Its products and services include firewall appliances, panorama, virtual system upgrades, subscription services, support and maintenance, and professional services.

About Mimecast

Mimecast Limited is a provider of cloud security and risk management services for corporate information and e-mail. The Company’s suite of cloud services protects customers from the business and data security risks. It also mitigates the business disruption that e-mail failure or downtime causes. In addition, its archiving services secure, store and manage critical corporate communications and information to address the compliance and e-discovery requirements. It has developed its cloud architecture to offer customers e-mail security, continuity and archiving capabilities in a single service. It has developed an operating system (OS) called Mime OS for native cloud services. It protects inbound and outbound e-mail from malware, spam, threats, e-mail denial of service (DoS) and distributed denial of service (DDoS), data leaks and other security threats. It also offers service bundles, and Mimecast mobile and desktop applications.

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