Cadence Design Systems (NASDAQ:CDNS – Get Rating) and Sprout Social (NASDAQ:SPT – Get Rating) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, valuation, analyst recommendations and institutional ownership.
Risk & Volatility
Cadence Design Systems has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Sprout Social has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.
Institutional and Insider Ownership
84.1% of Cadence Design Systems shares are owned by institutional investors. Comparatively, 86.3% of Sprout Social shares are owned by institutional investors. 2.0% of Cadence Design Systems shares are owned by insiders. Comparatively, 11.9% of Sprout Social shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cadence Design Systems||0||1||9||0||2.90|
Cadence Design Systems presently has a consensus target price of $220.80, indicating a potential downside of 1.64%. Sprout Social has a consensus target price of $64.36, indicating a potential upside of 50.98%. Given Sprout Social’s higher possible upside, analysts clearly believe Sprout Social is more favorable than Cadence Design Systems.
This table compares Cadence Design Systems and Sprout Social’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cadence Design Systems||23.24%||33.80%||18.97%|
Valuation and Earnings
This table compares Cadence Design Systems and Sprout Social’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cadence Design Systems||$3.56 billion||17.19||$848.95 million||$3.13||71.72|
|Sprout Social||$253.83 million||9.30||-$50.24 million||($0.93)||-45.84|
Cadence Design Systems has higher revenue and earnings than Sprout Social. Sprout Social is trading at a lower price-to-earnings ratio than Cadence Design Systems, indicating that it is currently the more affordable of the two stocks.
Cadence Design Systems beats Sprout Social on 11 of the 14 factors compared between the two stocks.
About Cadence Design Systems
Cadence Design Systems, Inc. engages in the design and development of integrated circuits and electronic devices. Its products include electronic design automation, software, emulation hardware, and intellectual property, commonly referred to as verification IP, and design IP. It operates through the following geographical segments: United States, Other Americas, China, Other Asia, Europe, Middle East and Africa and Japan. The company was founded by Alberto Sangiovanni-Vincentelli, Gudmundur A. Hjartarson, K. Bobby Chao, and K. Charles Janac in June 1988 and is headquartered in San Jose, CA.
About Sprout Social
Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It provides cloud software that brings together social messaging, data, and workflows in a unified system of record, intelligence, and action. The company offers provides various integrated tools in a range of functions comprising social engagement/response, publishing, reporting and analytics, social listening and business intelligence, reputation management, employee advocacy, and automation and workflows. Its tools serve a range of use-cases within its customers' organizations, including social and community management, public relations, marketing, customer service and care, commerce, sales and customer acquisition, recruiting and hiring, product development, and business strategy. The company also offers professional services, which primarily consist of consulting and training services. It serves approximately more than 31,000 customers across small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. The company was incorporated in 2010 and is headquartered in Chicago, Illinois.
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