Analyzing SolarWinds (SWI) and ChannelAdvisor (ECOM)

SolarWinds (NYSE: SWI) and ChannelAdvisor (NYSE:ECOM) are both technology companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, profitability, earnings, dividends, valuation, risk and analyst recommendations.

Earnings and Valuation

This table compares SolarWinds and ChannelAdvisor’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SolarWinds N/A N/A N/A $1.18 50.83
ChannelAdvisor $113.20 million 1.98 -$8.00 million ($0.40) -21.12

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

Profitability

This table compares SolarWinds and ChannelAdvisor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SolarWinds 20.52% 19.24% 12.70%
ChannelAdvisor -8.54% -9.48% -5.75%

Insider and Institutional Ownership

81.7% of ChannelAdvisor shares are held by institutional investors. 11.3% of ChannelAdvisor shares are held 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.

Risk & Volatility

SolarWinds has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, ChannelAdvisor has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for SolarWinds and ChannelAdvisor, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SolarWinds 0 0 0 0 N/A
ChannelAdvisor 0 4 3 0 2.43

ChannelAdvisor has a consensus target price of $14.13, suggesting a potential upside of 67.16%. Given ChannelAdvisor’s higher possible upside, analysts clearly believe ChannelAdvisor is more favorable than SolarWinds.

About SolarWinds

SolarWinds, Inc. (SolarWinds) is a holding company. The Company designs, develops, markets, sells and supports enterprise-class information technology (IT), infrastructure management software to IT and DevOps professionals in organizations of all sizes. Its products categories include network management, which is used to monitor and manage the performance of network infrastructure; systems management, which is used to monitor and manage the performance of applications, physical and virtual servers, storage and databases; MSP, which is used by managed service providers to monitor and manage the IT infrastructure of their end clients, SMBs, and cloud, its cloud-based products, which are used to monitor and manage applications and application infrastructure. Its customers include small- and mid-size businesses, enterprises, MSPs, and local, state and federal Government entities.

About ChannelAdvisor

Channeladvisor Corporation is a provider of Software as a service (SaaS) solutions. The Company’s SaaS solutions enable retailer and branded manufacturer customers to integrate, manage and optimize their merchandise sales via hundreds of online channels. The Company’s platform enable its customers to connect with new and existing sources of demand for their products, including e-commerce marketplaces, such as Amazon, eBay, Jet.com, Newegg, Sears and Walmart, search engines and comparison shopping Websites, such as Google, Microsoft’s Bing and Nextag, and social channels, such as Facebook, Instagram and Pinterest. Its suite of solutions provides customers with a single, integrated user interface to manage their product listings, inventory availability, pricing optimization, search terms, data analytics and other functions. It also offers solutions that allow manufacturers to send their Web visitors or digital marketing audiences directly to authorized resellers.

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