Palo Alto Networks (NYSE:PANW) and Digi International (NASDAQ:DGII) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Palo Alto Networks and Digi International, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Palo Alto Networks | 1 | 2 | 28 | 0 | 2.87 |
| Digi International | 1 | 1 | 6 | 0 | 2.63 |
Palo Alto Networks presently has a consensus target price of $381.3030, suggesting a potential upside of 9.10%. Digi International has a consensus target price of $26.3571, suggesting a potential upside of 40.65%. Given Digi International's higher possible upside, analysts clearly believe Digi International is more favorable than Palo Alto Networks.
Valuation and Earnings
This table compares Palo Alto Networks and Digi International's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Palo Alto Networks | $3.41 billion | 9.97 | $-267,000,000.00 | ($1.24) | -281.86 |
| Digi International | $279.27 million | 1.99 | $8.41 million | $0.28 | 66.93 |
Digi International has lower revenue, but higher earnings than Palo Alto Networks. Palo Alto Networks is trading at a lower price-to-earnings ratio than Digi International, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Palo Alto Networks and Digi International's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Palo Alto Networks | -8.36% | -8.66% | -1.16% |
| Digi International | 3.01% | 3.17% | 2.12% |
Volatility & Risk
Palo Alto Networks has a beta of 1.5, suggesting that its stock price is 50% more volatile than the S&P 500. Comparatively, Digi International has a beta of 1.81, suggesting that its stock price is 81% more volatile than the S&P 500.
Institutional and Insider Ownership
80.8% of Palo Alto Networks shares are held by institutional investors. Comparatively, 85.1% of Digi International shares are held by institutional investors. 2.3% of Palo Alto Networks shares are held by company insiders. Comparatively, 6.5% of Digi International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Summary
Digi International beats Palo Alto Networks on 10 of the 14 factors compared between the two stocks.
