Reviewing Crossroads Systems (CRDSQ) and Radcom (NASDAQ:RDCM)

Crossroads Systems (OTCMKTS: CRDSQ) and Radcom (NASDAQ:RDCM) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Profitability

This table compares Crossroads Systems and Radcom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Crossroads Systems -518.75% -22.99% -7.88%
Radcom -0.27% 0.71% 0.55%

Analyst Recommendations

This is a breakdown of recent ratings for Crossroads Systems and Radcom, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Crossroads Systems 0 0 0 0 N/A
Radcom 0 0 2 0 3.00

Radcom has a consensus price target of $27.00, suggesting a potential upside of 33.33%. Given Radcom’s higher probable upside, analysts clearly believe Radcom is more favorable than Crossroads Systems.

Insider and Institutional Ownership

7.5% of Crossroads Systems shares are owned by institutional investors. Comparatively, 14.3% of Radcom shares are owned by institutional investors. 27.4% of Crossroads Systems shares are owned by insiders. Comparatively, 69.0% of Radcom shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Crossroads Systems has a beta of 2.74, meaning that its stock price is 174% more volatile than the S&P 500. Comparatively, Radcom has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.

Earnings & Valuation

This table compares Crossroads Systems and Radcom’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Crossroads Systems N/A N/A N/A ($1.08) -2.50
Radcom $29.51 million 9.03 $1.91 million ($0.01) -2,022.98

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

Summary

Radcom beats Crossroads Systems on 9 of the 10 factors compared between the two stocks.

Crossroads Systems Company Profile

Crossroads Systems, Inc. is an intellectual property licensing company. The Company’s intellectual property assets are identified in two distinct categories: the first category is known as the 972 patent family and the second category is known as the non-972 patents. As of October 31, 2016, the 972 patent family consisted of 31 patents and pending patents that are primarily concentrated around access controls. As of October 31, 2016, the non-972 patents consisted of 140 patents and pending patents that are primarily directed to five product families: optimizing command processing, enabling interoperability, managing networks, enhancing tape libraries and improving data systems. As of October 31, 2016, approximately 50 companies have licensed 972 patents from the Company. The Company’s subsidiaries include Crossroads Systems (Texas), Inc. and Crossroads Europe GmbH.

Radcom Company Profile

RADCOM Ltd. (RADCOM) provides service assurance and customer experience management solutions for communication service providers (CSPs). The Company provides solutions for networks, including long-term evolution (LTE), LTE Advanced (LTE-A), voice over LTE (VoLTE), Internet protocol multimedia subsystem (IMS), Voice over Internet protocol (VoIP), universal mobile telecommunications system (UMTS) or global system for mobile communications (GSM) and mobile broadband. Its software-based solutions enable CSPs to manage both existing networks and network functions virtualization (NFV) based architectures. Its products and solutions include The MaveriQ Solution for Service Assurance and customer experience management (CEM). The MaveriQ solution is a probe-based customer and service assurance solution designed to enable CSPs to carry out end-to-end voice and data quality monitoring and to manage their networks and services. The MaveriQ solution offers analysis and troubleshooting tools.

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