Analyzing AutoWeb (AUTO) & Red Hat (RHT)

AutoWeb (NASDAQ: AUTO) and Red Hat (NYSE:RHT) are both auto/tires/trucks companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Risk and Volatility

AutoWeb has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500. Comparatively, Red Hat has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Valuation & Earnings

This table compares AutoWeb and Red Hat’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AutoWeb $142.13 million 0.34 -$64.96 million $0.29 12.97
Red Hat $2.92 billion 10.04 $258.80 million $2.30 71.78

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

Analyst Recommendations

This is a summary of current ratings and price targets for AutoWeb and Red Hat, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AutoWeb 0 2 1 0 2.33
Red Hat 1 9 23 0 2.67

AutoWeb presently has a consensus price target of $5.00, suggesting a potential upside of 32.98%. Red Hat has a consensus price target of $156.25, suggesting a potential downside of 5.36%. Given AutoWeb’s higher probable upside, equities analysts plainly believe AutoWeb is more favorable than Red Hat.

Profitability

This table compares AutoWeb and Red Hat’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AutoWeb -55.22% -0.52% -0.40%
Red Hat 8.86% 29.36% 8.50%

Insider and Institutional Ownership

44.5% of AutoWeb shares are owned by institutional investors. Comparatively, 95.5% of Red Hat shares are owned by institutional investors. 30.6% of AutoWeb shares are owned by company insiders. Comparatively, 0.7% of Red Hat shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Red Hat beats AutoWeb on 11 of the 14 factors compared between the two stocks.

AutoWeb Company Profile

AutoWeb, Inc. operates as an automotive marketing services company in the United States. It assists automotive retail dealers and manufacturers to market and sell new and used vehicles to consumers through its programs. The company's products include new vehicle lead program, which allows consumers to submit requests for pricing and availability of specific makes and models; and used vehicle lead program, as well as finance leads program, which provides vehicle financing and other services from dealers or financial institutions. It owns and operates an automotive Website, Autobytel.com that offers consumers the information and tools to aid them with their automotive purchase decisions; and an automotive search engine that enables manufactures and dealers to optimize advertising campaigns. The company's products and services also comprise iControl by Autobytel, which allows dealers various options to filter and control vehicle leads; WebLeads+ that offers various coupon options, which display marketing messages to consumers visiting the dealer's Website; Email Manager that provides follow up emails on behalf of the dealers to consumers who have submitted leads; and Lead Call, which provides a live phone call to the consumer on behalf of the dealers and schedules an appointment for the consumer to visit the dealership regarding the vehicle. In addition, it offers Payment Pro, a dealer Website conversion tool that offers consumers online monthly payment information; mobile products and services that facilitate communication between dealers and car buyers on smart phones and tablets; and SaleMove, which allows auto dealers and manufacturers to interact with consumer through live video, audio and text based chat, or phone, as well as sells fixed placement advertising across its Website. The company was formerly known as Autobytel Inc. and changed its name to AutoWeb, Inc. in October 2017. AutoWeb, Inc. was founded in 1995 and is headquartered in Irvine, California.

Red Hat Company Profile

Red Hat, Inc. provides open source software solutions to develop and offer operating system, virtualization, management, middleware, cloud, mobile, and storage technologies to various enterprises worldwide. It offers infrastructure-related solutions, such as Red Hat Enterprise Linux, an operating system platform that runs on hardware for use in hybrid cloud environments; Red Hat Satellite, a system management offering that helps to deploy, scale, and manage in hybrid cloud environments; and Red Hat Enterprise Virtualization, a software solution that allows customers to utilize and manage a common hardware infrastructure to run multiple operating systems and applications. The company offers application development-related and other technology solutions, such as Red Hat JBoss Middleware, a solution for developing, deploying, and managing applications; integrating applications, data, and devices; and automating business processes in hybrid cloud environments; The company's application development-related and other technology solutions also includes Red Hat cloud offerings, a software solution that enables customers to build and manage various cloud computing environments; Red Hat Mobile, a software development platform that enables customers to develop, integrate, deploy, and manage mobile applications for enterprises; and Red Hat Storage, a software solution that enables customers to manage large, unstructured, or semi-structured data in hybrid cloud environments. It also provides consulting, support, and training services; and realtime operating system, distributed computing, directory services, and user authentication. The company was formerly known as Red Hat Software, Inc. and changed its name to Red Hat, Inc. in June 1999. Red Hat, Inc. was founded in 1993 and is headquartered in Raleigh, North Carolina.

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