Zuora (NYSE:ZUO) and Rosetta Stone (NYSE:RST) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.

Profitability

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

Net Margins Return on Equity Return on Assets
Zuora -27.34% -47.35% -20.78%
Rosetta Stone -10.28% N/A -9.91%

Analyst Ratings

This is a breakdown of current ratings and target prices for Zuora and Rosetta Stone, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zuora 1 3 2 0 2.17
Rosetta Stone 0 4 1 0 2.20

Zuora presently has a consensus price target of $15.21, indicating a potential upside of 59.81%. Rosetta Stone has a consensus price target of $25.00, indicating a potential downside of 16.53%. Given Zuora’s higher possible upside, equities research analysts plainly believe Zuora is more favorable than Rosetta Stone.

Valuation and Earnings

This table compares Zuora and Rosetta Stone’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zuora $276.06 million 4.08 -$83.39 million ($0.74) -12.86
Rosetta Stone $182.70 million 4.03 -$12.96 million ($0.55) -54.45

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

Risk & Volatility

Zuora has a beta of 2.12, indicating that its stock price is 112% more volatile than the S&P 500. Comparatively, Rosetta Stone has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Institutional and Insider Ownership

51.6% of Zuora shares are owned by institutional investors. Comparatively, 86.0% of Rosetta Stone shares are owned by institutional investors. 17.1% of Zuora shares are owned by company insiders. Comparatively, 12.3% of Rosetta Stone shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Zuora Company Profile

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.

Rosetta Stone Company Profile

Rosetta Stone Inc., together with its subsidiaries, provides technology-based learning products in the United States and internationally. It operates through three segments: Literacy, E&E Language, and Consumer Language. The company develops, markets, and supports a suite of language-learning, literacy, and brain fitness solutions consisting of Web-based software subscriptions, perpetual software products, online and professional services, audio practice products, and mobile applications. It also provides administrative tools for performance monitoring, and to measure and track learner progress; and custom solutions, including curriculum development, global collaboration programs, group and live tutoring, and language courses for mission-critical government programs. The company offers its courses in approximately 30 languages under the Rosetta Stone, The Blue Stone Logo, Lexia, Lexia PowerUP Literacy, TruAccent, and Catalyst brand names. It sells its products and services through call centers, Websites, app-stores, third party e-commerce Websites, select retail resellers, consignment distributors, daily deal partners, and third-party resellers, as well as directly to individuals, educational institutions, corporations, and government agencies. Rosetta Stone Inc. was founded in 1992 and is headquartered in Arlington, Virginia.

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