Critical Analysis: Qualys (QLYS) versus Demandware (DWRE)

Qualys (NASDAQ: QLYS) and Demandware (NYSE:DWRE) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Insider and Institutional Ownership

73.6% of Qualys shares are held by institutional investors. 30.2% of Qualys shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Qualys and Demandware’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Qualys $211.63 million 9.08 $52.41 million $1.02 50.20
Demandware N/A N/A N/A ($1.20) -62.47

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

Profitability

This table compares Qualys and Demandware’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Qualys 18.92% 14.69% 9.39%
Demandware -17.65% -16.30% -12.67%

Risk & Volatility

Qualys has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Demandware has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Qualys and Demandware, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Qualys 0 9 5 0 2.36
Demandware 0 0 0 0 N/A

Qualys presently has a consensus price target of $45.40, indicating a potential downside of 11.33%. Given Qualys’ higher probable upside, analysts clearly believe Qualys is more favorable than Demandware.

Summary

Qualys beats Demandware on 9 of the 10 factors compared between the two stocks.

About Qualys

Qualys, Inc. is a provider of cloud-based security and compliance solutions. The Company’s solutions enable organizations to identify security risks to their information technology (IT) infrastructures, help protect their IT systems and applications from cyber-attacks. Its suite of security and compliance solutions delivered on its Qualys Cloud Platform enables its customers to identify their IT assets, collect and analyze IT security data, discover and prioritize vulnerabilities, recommend remediation actions and verify the implementation of such actions. Its Qualys Cloud Platform consists of a suite of IT security and compliance solutions. The Qualys Cloud Suite includes solutions, such as Vulnerability Management, Continuous Monitoring, Cloud Agent, AssetView, ThreatPROTECT, Policy Compliance, Payment Card Industry Compliance, Security Assessment Questionnaire, Web Application Scanning and Web Application Firewall. It provides its solutions through a software-as-a-service model.

About Demandware

Demandware, Inc. is a provider of enterprise-class cloud commerce solutions for retailers and branded manufacturers, including solutions for digital commerce and point of sale, as well as order management and intelligence capabilities. The Company’s Demandware Commerce offering is a combination of its cloud platform, community and related services that enables customers to establish and execute complex digital commerce solutions. Demandware Commerce facilitates omni-channel processes, multi-brand and multi-site rollouts, predictive merchandising and in-store operations. Its technology platform is the Demandware Commerce Cloud. The Demandware Commerce Cloud consists of over two primary solutions, such as Demandware Digital and Demandware Store. It also offers Demandware LINK, which includes technology, solution and an end-to end partners. LINK Technology Partners provide customers with access to technologies that complement the Demandware Commerce Cloud through pre-built integrations.

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