Comparing Smith Micro Software (NASDAQ:SMSI) and Open Text (NASDAQ:OTEX)

Open Text (NASDAQ:OTEX) and Smith Micro Software (NASDAQ:SMSI) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Open Text and Smith Micro Software, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Open Text	0	11	3	0	2.21
Smith Micro Software	1	0	0	0	1.00

Open Text currently has a consensus target price of $35.75, indicating a potential upside of 58.75%. Given Open Text’s stronger consensus rating and higher possible upside, equities analysts plainly believe Open Text is more favorable than Smith Micro Software.

Profitability

This table compares Open Text and Smith Micro Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Open Text	8.42%	23.60%	6.94%
Smith Micro Software	-168.92%	-52.96%	-41.19%

Valuation & Earnings

This table compares Open Text and Smith Micro Software”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Open Text	$5.17 billion	1.07	$435.87 million	$1.70	13.25
Smith Micro Software	$17.36 million	1.06	-$29.33 million	($1.51)	-0.47

Open Text has higher revenue and earnings than Smith Micro Software. Smith Micro Software is trading at a lower price-to-earnings ratio than Open Text, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

70.4% of Open Text shares are owned by institutional investors. Comparatively, 20.8% of Smith Micro Software shares are owned by institutional investors. 10.6% of Open Text shares are owned by company insiders. Comparatively, 29.8% of Smith Micro Software shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Open Text has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Smith Micro Software has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.

Summary

Open Text beats Smith Micro Software on 13 of the 14 factors compared between the two stocks.

About Open Text

Open Text Corporation provides information management software and solutions. The company offers content services, which includes content collaboration and intelligent capture to records management, collaboration, e-signatures, and archiving; and operates experience cloud platform that provides customer experience and web content management, digital asset management, customer analytics, AI and insights, e-discovery, digital fax, omnichannel communications, secure messaging, and voice of customer, as well as customer journey, testing, and segmentation. It also provides cybersecurity cloud solutions to protect, prevent, detect, respond and quickly recover from threats across endpoints, network, applications, IT infrastructure and data, AI-led threat intelligence; and to protect critical information and processes through threat intelligence, forensics, identity, encryption, and cloud-based application security. In addition, the company offers business network cloud for digital supply chains and secure e-commerce ecosystems including digitize and automate procure-to-pay and order-to-cash processes; IT operations management cloud for automation and advancement of IT support and asset management; and analytics & AI cloud solutions that offers artificial intelligence with practical usage to provide organizations with actionable insights and better automation, such as visualizations, advanced natural language processing and understanding, and integrated computer vision capabilities. In addition, it provides application automation cloud, developers cloud, and services. Further, it has strategic partnerships with SAP SE, Google Cloud, Amazon AWS, Microsoft Corporation, Oracle Corporation, Salesforce.com Corporation, DXC Technology Company, Accenture plc, Capgemini Technology Services SAS, Deloitte Consulting LLP, Hewlett Packard Enterprises, and Tata Consultancy Services. Open Text Corporation was incorporated in 1991 and is headquartered in Waterloo, Canada.

About Smith Micro Software

Smith Micro Software, Inc. engages in the development and sale of software to enhance the mobile experience to wireless and cable service providers in the Americas, Europe, the Middle East, and Africa. The company offers SafePath Family, SafePath IoT, SafePath Home, and SafePath Premium product suite, which provides tools to protect digital lifestyles and manage connected devices inside and outside the home; and CommSuite, a messaging platform that helps mobile service provides deliver a next-generation voicemail experience to mobile subscribers, as well as enables multi-language voice-to-text (VTT) transcription messaging. It also offers ViewSpot, a retail display management platform that provides on-screen and interactive demos to wireless carriers and other smartphone retailers; and technical support and customer services. Smith Micro Software, Inc. was founded in 1982 and is headquartered in Pittsburgh, Pennsylvania.