Contrasting TSS (NASDAQ:TSSI) & Rackspace Technology (NASDAQ:RXT)

Rackspace Technology (NASDAQ:RXT) and TSS (NASDAQ:TSSI) are both small-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings for Rackspace Technology and TSS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rackspace Technology	1	1	0	0	1.50
TSS	0	2	1	0	2.33

Rackspace Technology currently has a consensus target price of $4.00, indicating a potential upside of 50.77%. TSS has a consensus target price of $12.00, indicating a potential upside of 77.91%. Given TSS’s stronger consensus rating and higher probable upside, analysts clearly believe TSS is more favorable than Rackspace Technology.

Risk and Volatility

Rackspace Technology has a beta of 3.29, meaning that its share price is 229% more volatile than the S&P 500. Comparatively, TSS has a beta of 2.06, meaning that its share price is 106% more volatile than the S&P 500.

Profitability

This table compares Rackspace Technology and TSS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rackspace Technology	-5.88%	N/A	-1.81%
TSS	7.44%	19.22%	8.46%

Insider and Institutional Ownership

82.5% of Rackspace Technology shares are held by institutional investors. 2.3% of Rackspace Technology shares are held by insiders. Comparatively, 16.0% of TSS shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Rackspace Technology and TSS”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rackspace Technology	$2.69 billion	0.25	-$225.80 million	($0.65)	-4.08
TSS	$245.72 million	0.77	$15.12 million	$0.58	11.63

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

Summary

TSS beats Rackspace Technology on 11 of the 14 factors compared between the two stocks.

About Rackspace Technology

Rackspace Technology, Inc. is a technology services company that helps businesses design, build, operate and optimize information technology environments across public, private and hybrid clouds. Its offerings are intended to support organizations at various stages of cloud adoption, from migration and modernization to ongoing management and optimization. The company provides managed cloud services for major cloud platforms, including Amazon Web Services, Microsoft Azure and Google Cloud. Its services also include application development and modernization, data and artificial intelligence solutions, cybersecurity, professional services, managed hosting and infrastructure management.

About TSS

TSS, Inc. (NASDAQ:TSSI) provides data center infrastructure solutions and related services for organizations that require reliable, scalable computing environments. The company supports the planning, design, deployment, and operation of data center facilities and technology infrastructure. Its services may include data center engineering and construction support, equipment procurement and integration, installation, infrastructure management, and ongoing maintenance. TSS serves customers with demanding information technology requirements, including enterprises, technology companies, and data center operators.