DocuSign (NASDAQ:DOCU) and ServiceNow (NYSE:NOW) are both large-cap business services companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.
Analyst Recommendations
This is a summary of current recommendations for DocuSign and ServiceNow, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
DocuSign | 0 | 4 | 15 | 0 | 2.79 |
ServiceNow | 0 | 3 | 25 | 1 | 2.93 |
DocuSign presently has a consensus price target of $268.6111, suggesting a potential upside of 18.93%. ServiceNow has a consensus price target of $570.50, suggesting a potential upside of 6.17%. Given DocuSign's higher possible upside, analysts clearly believe DocuSign is more favorable than ServiceNow.
Earnings & Valuation
This table compares DocuSign and ServiceNow's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
DocuSign | $973.97 million | 43.40 | $-208,360,000.00 | ($0.94) | -241.03 |
ServiceNow | $3.46 billion | 30.34 | $626.70 million | $0.65 | 823.71 |
ServiceNow has higher revenue and earnings than DocuSign. DocuSign is trading at a lower price-to-earnings ratio than ServiceNow, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
DocuSign has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, ServiceNow has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.
Profitability
This table compares DocuSign and ServiceNow's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
DocuSign | -16.83% | -30.14% | -7.60% |
ServiceNow | 16.60% | 9.79% | 3.53% |
Institutional and Insider Ownership
72.8% of DocuSign shares are held by institutional investors. Comparatively, 87.2% of ServiceNow shares are held by institutional investors. 5.1% of DocuSign shares are held by company insiders. Comparatively, 1.0% of ServiceNow shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Summary
ServiceNow beats DocuSign on 12 of the 15 factors compared between the two stocks.