Radware (RDWR) vs. Digimarc (DMRC) Critical Contrast

Radware (NASDAQ: RDWR) and Digimarc (NASDAQ:DMRC) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Analyst Ratings

This is a summary of current recommendations for Radware and Digimarc, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Radware 0 0 6 0 3.00
Digimarc 0 1 3 0 2.75

Radware presently has a consensus target price of $20.83, suggesting a potential upside of 3.60%. Digimarc has a consensus target price of $45.33, suggesting a potential upside of 16.24%. Given Digimarc’s higher possible upside, analysts clearly believe Digimarc is more favorable than Radware.

Institutional and Insider Ownership

61.7% of Radware shares are owned by institutional investors. Comparatively, 56.3% of Digimarc shares are owned by institutional investors. 21.6% of Radware shares are owned by company insiders. Comparatively, 7.5% of Digimarc shares are owned 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.

Volatility and Risk

Radware has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Digimarc has a beta of -1.19, meaning that its share price is 219% less volatile than the S&P 500.

Profitability

This table compares Radware and Digimarc’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Radware -5.74% -2.27% -1.55%
Digimarc -90.69% -30.98% -29.02%

Valuation and Earnings

This table compares Radware and Digimarc’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Radware $196.59 million 4.45 -$8.65 million ($0.26) -77.34
Digimarc $21.79 million 20.28 -$21.67 million ($2.25) -17.33

Radware has higher revenue and earnings than Digimarc. Radware is trading at a lower price-to-earnings ratio than Digimarc, indicating that it is currently the more affordable of the two stocks.

Summary

Radware beats Digimarc on 11 of the 14 factors compared between the two stocks.

Radware Company Profile

Radware Ltd. is a provider of cyber security and application delivery solutions. The Company’s solutions incorporate Distributed Denial of Service protection, Web application firewall (WAF) and Application Delivery Controllers (ADC) technologies to enable its customers to provide cyber-attack mitigation solutions for a range of applications. The Company’s products and activities are focused on protecting against cyber-attacks and ensuring optimal application service level for enterprises’ and carriers’ data centers. Its solutions include application and network security, and application delivery. Its application and network Security products include DefensePro Attack Mitigation Device, AppWall Web Application Firewall, DefenseFlow Cyber Command and Control application, and DefensePipe Cloud Scrubbing Service. Its application delivery products include Alteon NG, LinkProof NG and FastView. Its management solutions include APSolute Vision, application performance monitoring and vDirect.

Digimarc Company Profile

Digimarc Corporation (Digimarc) enables governments and enterprises to give digital identities to media and objects that computers can sense and recognize. The Company’s Digimarc Discover, Digimarc Barcode and Intuitive Computing Platform are designed to optimize the identification of consumer brand impressions, facilitating mobile-centric shopping. The Company operates through media management solutions segment. The Company’s platform includes means to embed Digimarc Barcodes, invisible and inaudible barcode-like information that is recognizable by smartphones, industrial scanners, and other computer interfaces into various forms of media content, including consumer product packaging. Its Digimarc Barcodes has a range of applications, including facilitating scanning of products at retail checkout, as well as engagement with smartphone-equipped consumers. The Digimarc Barcode allows automatic identification of media without visible computer codes, such as traditional barcodes.

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