Contrasting Square (SQ) & New Relic (NEWR)
Square (NYSE: SQ) and New Relic (NYSE:NEWR) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, dividends, valuation and analyst recommendations.
Volatility and Risk
Square has a beta of 4.8, suggesting that its stock price is 380% more volatile than the S&P 500. Comparatively, New Relic has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.
Earnings & Valuation
This table compares Square and New Relic’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Square||$1.71 billion||8.66||-$171.59 million||($0.16)||-238.06|
|New Relic||$263.48 million||11.96||-$61.07 million||($1.12)||-51.10|
New Relic has lower revenue, but higher earnings than Square. Square is trading at a lower price-to-earnings ratio than New Relic, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
54.3% of Square shares are held by institutional investors. Comparatively, 77.2% of New Relic shares are held by institutional investors. 32.7% of Square shares are held by company insiders. Comparatively, 23.1% of New Relic shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This table compares Square and New Relic’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current recommendations and price targets for Square and New Relic, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Square currently has a consensus price target of $33.17, indicating a potential downside of 12.91%. New Relic has a consensus price target of $53.40, indicating a potential downside of 6.69%. Given New Relic’s stronger consensus rating and higher possible upside, analysts clearly believe New Relic is more favorable than Square.
Square beats New Relic on 8 of the 13 factors compared between the two stocks.
Square, Inc. (Square) is a commerce ecosystem. The Company enables its sellers start, run and grow their businesses. It combines software with hardware to enable sellers to turn mobile devices and computing devices into payments and point-of-sale solutions. Once a seller downloads the Square Point of Sale mobile application, they can take their first payment. With its offering, a seller can accept payments in person via magnetic stripe (a swipe), Europay, MasterCard, and Visa (EMV) (a dip), or Near Field Communication (NFC) (a tap); or online via Square Invoices, Square Virtual Terminal, or the seller’s Website. Once on its system, sellers gain access to technology and features, such as reporting and analytics, next-day settlements, digital receipts, payment dispute management and chargeback protection, and Payment Card Industry (PCI) compliance. On the consumer (buyer) side, Square Cash offers individuals access to a way to send and receive money.
About New Relic
New Relic, Inc. (New Relic) is a provider of enterprise software. The Company’s cloud-based platform and range of products enable organizations to collect, store and analyze software data in real time. The Company’s New Relic Software Analytics Cloud consists of an integrated suite of products, a data database and an open platform. New Relic offers an integrated suite of products, namely, New Relic APM, for application performance management; New Relic Mobile, for mobile application performance management; New Relic Servers, for server monitoring for cloud and data centers; New Relic Browser, for end user experience monitoring and performance monitoring; New Relic Synthetics, for software testing through simulated usage; New Relic Plugins, plugins to extend its functionality into other applications; New Relic Alerts, for policy management and delivering alerts across entire suite of products, and New Relic Insights, for real-time big data analytics for business managers.
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