Contrasting Adobe Systems (ADBE) & New Relic (NEWR)

Adobe Systems (NASDAQ: ADBE) and New Relic (NYSE:NEWR) are both mid-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.

Volatility & Risk

Adobe Systems has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, New Relic has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Insider and Institutional Ownership

87.5% of Adobe Systems shares are owned by institutional investors. Comparatively, 74.8% of New Relic shares are owned by institutional investors. 0.4% of Adobe Systems shares are owned by insiders. Comparatively, 23.1% of New Relic shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Adobe Systems and New Relic’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Adobe Systems $6.90 billion 11.00 $2.32 billion $3.19 48.15
New Relic $284.97 million 9.65 -$46.54 million ($1.13) -44.64

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

Profitability

This table compares Adobe Systems and New Relic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Adobe Systems 23.06% 21.40% 12.51%
New Relic -20.68% -29.19% -16.58%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Adobe Systems and New Relic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Adobe Systems 1 5 23 0 2.76
New Relic 0 2 10 0 2.83

Adobe Systems currently has a consensus target price of $159.57, suggesting a potential upside of 3.88%. New Relic has a consensus target price of $49.90, suggesting a potential downside of 1.07%. Given Adobe Systems’ higher probable upside, analysts plainly believe Adobe Systems is more favorable than New Relic.

Summary

Adobe Systems beats New Relic on 10 of the 13 factors compared between the two stocks.

About Adobe Systems

Adobe Systems Incorporated is a software company. The Company offers products and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences. It operates through three segments: Digital Media, Digital Marketing, and Print and Publishing. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses and enterprises to create, publish, promote and monetize their digital content. Its Digital Marketing segment provides solutions and services for how digital advertising and marketing are created, managed, executed, measured and optimized. Its Print and Publishing segment addresses market opportunities ranging from the diverse authoring and publishing needs of technical and business publishing to its legacy type and original equipment manufacturer (OEM) printing businesses.

About New Relic

New Relic, Inc. (New Relic) is a provider of enterprise software. The Company’s cloud-based platform and range of products enable organizations to collect, store and analyze software data in real time. The Company’s New Relic Software Analytics Cloud consists of an integrated suite of products, a data database and an open platform. New Relic offers an integrated suite of products, namely, New Relic APM, for application performance management; New Relic Mobile, for mobile application performance management; New Relic Servers, for server monitoring for cloud and data centers; New Relic Browser, for end user experience monitoring and performance monitoring; New Relic Synthetics, for software testing through simulated usage; New Relic Plugins, plugins to extend its functionality into other applications; New Relic Alerts, for policy management and delivering alerts across entire suite of products, and New Relic Insights, for real-time big data analytics for business managers.

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