Red Hat (NYSE:RHT) and Internet Initiative Japan (NASDAQ:IIJI) are both computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.

Valuation & Earnings

This table compares Red Hat and Internet Initiative Japan’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Red Hat $2.92 billion 7.38 $258.80 million $2.30 53.27
Internet Initiative Japan $1.59 billion 0.56 $45.98 million $0.52 18.25

Red Hat has higher revenue and earnings than Internet Initiative Japan. Internet Initiative Japan is trading at a lower price-to-earnings ratio than Red Hat, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Red Hat has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Internet Initiative Japan has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Red Hat and Internet Initiative Japan, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Hat 1 9 18 0 2.61
Internet Initiative Japan 0 0 0 0 N/A

Red Hat presently has a consensus target price of $155.96, indicating a potential upside of 27.31%. Given Red Hat’s higher possible upside, research analysts clearly believe Red Hat is more favorable than Internet Initiative Japan.

Institutional & Insider Ownership

95.3% of Red Hat shares are owned by institutional investors. Comparatively, 0.5% of Internet Initiative Japan shares are owned by institutional investors. 0.6% of Red Hat shares are owned by insiders. Comparatively, 6.7% of Internet Initiative Japan shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Red Hat and Internet Initiative Japan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Hat 9.15% 31.80% 8.85%
Internet Initiative Japan 2.59% 6.49% 3.13%

Dividends

Internet Initiative Japan pays an annual dividend of $0.05 per share and has a dividend yield of 0.5%. Red Hat does not pay a dividend. Internet Initiative Japan pays out 9.6% of its earnings in the form of a dividend. Internet Initiative Japan has raised its dividend for 2 consecutive years.

Summary

Red Hat beats Internet Initiative Japan on 13 of the 16 factors compared between the two stocks.

Red Hat Company Profile

Red Hat, Inc. provides open source software solutions to develop and offer operating system, virtualization, management, middleware, cloud, mobile, and storage technologies to various enterprises worldwide. It offers infrastructure-related solutions, such as Red Hat Enterprise Linux, an operating system platform that runs on hardware for use in hybrid cloud environments; Red Hat Satellite, a system management offering that helps to deploy, scale, and manage in hybrid cloud environments; and Red Hat Enterprise Virtualization, a software solution that allows customers to utilize and manage a common hardware infrastructure to run multiple operating systems and applications. The company offers application development-related and other technology solutions, such as Red Hat JBoss Middleware, a solution for developing, deploying, and managing applications; integrating applications, data, and devices; and automating business processes in hybrid cloud environments; The company's application development-related and other technology solutions also includes Red Hat cloud offerings, a software solution that enables customers to build and manage various cloud computing environments; Red Hat Mobile, a software development platform that enables customers to develop, integrate, deploy, and manage mobile applications for enterprises; and Red Hat Storage, a software solution that enables customers to manage large, unstructured, or semi-structured data in hybrid cloud environments. It also provides consulting, support, and training services; and realtime operating system, distributed computing, directory services, and user authentication. Red Hat, Inc. has collaboration with Juniper Networks Expand to provide a unified solution for enterprises designed to manage and run applications and services. The company was formerly known as Red Hat Software, Inc. and changed its name to Red Hat, Inc. in June 1999. Red Hat, Inc. was founded in 1993 and is headquartered in Raleigh, North Carolina.

Internet Initiative Japan Company Profile

Internet Initiative Japan Inc. offers Internet connectivity, WAN, outsourcing, systems integration, and equipment sales services in Japan. It operates in two segments, Network Services and Systems Integration Business, and ATM Operation Business. The company's Internet connectivity services for enterprise include IP services and IIJ data center connectivity services, IIJ FiberAccess/F and IIJ DSL/F services, IIJ mobile services, and dial-up access services, as well as other Internet connectivity services comprising IIJ ISDN/F and IIJ line management/F services. Its Internet connectivity services for consumers consist of various service, including ADSL, fiber optic, WiMAX, 3G, and LTE wireless data communication services under the IIJmio and hi-ho brand names. The company also offers WAN services, a closed network service primarily using dedicated lines, as well as wide-area Ethernet services and IP-VPN services to corporate customers; outsourcing services that comprise security-related, network-related, server-related, data center-related, and IIJ GIO/Hosting package services for non-customizable hosting package cloud computing services; and customer support and help desk solutions, and IP phone services. In addition, it provides systems integration services, which include consulting, project planning, systems design, and development of network systems, which focus on Internet business systems, and Intranet and Extranet corporate information systems; and systems operation and maintenance services. Further, the company sells routers, iPads, and other equipment, as well as software; and provides automated teller machine (ATM) services. As of June 29, 2018, it operated 29 primary points of presence (POP) for dedicated access and 1 universal POP for nationwide dial-up access; 27 Internet data centers; and 1,096 ATMs. The company was founded in 1992 and is headquartered in Tokyo, Japan.

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