Analyzing Rosetta Stone (RST) & Radware (RDWR)

Rosetta Stone (NYSE: RST) and Radware (NASDAQ:RDWR) 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 risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.

Insider & Institutional Ownership

73.4% of Rosetta Stone shares are held by institutional investors. Comparatively, 60.7% of Radware shares are held by institutional investors. 13.0% of Rosetta Stone shares are held by insiders. Comparatively, 21.6% of Radware shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Rosetta Stone and Radware’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Rosetta Stone $194.09 1.16 -$27.55 ($0.53) -19.21
Radware $196.59 4.23 -$8.65 ($0.26) -73.61

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

Analyst Ratings

This is a summary of recent recommendations for Rosetta Stone and Radware, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rosetta Stone 0 0 1 0 3.00
Radware 0 0 6 0 3.00

Rosetta Stone currently has a consensus price target of $15.00, indicating a potential upside of 47.35%. Radware has a consensus price target of $20.83, indicating a potential upside of 8.85%. Given Rosetta Stone’s higher probable upside, analysts clearly believe Rosetta Stone is more favorable than Radware.

Profitability

This table compares Rosetta Stone and Radware’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rosetta Stone -6.06% -926.26% -4.89%
Radware -5.74% -2.27% -1.56%

Risk and Volatility

Rosetta Stone has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, Radware has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Summary

Radware beats Rosetta Stone on 10 of the 12 factors compared between the two stocks.

About Rosetta Stone

Rosetta Stone Inc. (Rosetta Stone) offers personalized language and reading programs. The Company’s solutions are used by schools, businesses, government organizations and individuals around the world. Its segments include Enterprise & Education, which derives revenues from sales to educational institutions, corporations and government agencies worldwide, and Consumer, which derives revenue from sales to individuals and retail partners. Its cloud-based programs allow users to learn online or on-the-go via tablet or smartphone, whether in a classroom, corporate setting, or personal learning environment. Its Fit Brains business offers personalized brain training programs. The Company offers courses in over 30 languages across formats, including Web-based software subscriptions, digital downloads, mobile applications, and perpetual compact disc packages. It also offers a portfolio of technology-based learning products for personal use to the global consumer.

About Radware

Radware Ltd. is a provider of cyber security and application delivery solutions. The Company’s solutions incorporate Distributed Denial of Service protection, Web application firewall (WAF) and Application Delivery Controllers (ADC) technologies to enable its customers to provide cyber-attack mitigation solutions for a range of applications. The Company’s products and activities are focused on protecting against cyber-attacks and ensuring optimal application service level for enterprises’ and carriers’ data centers. Its solutions include application and network security, and application delivery. Its application and network Security products include DefensePro Attack Mitigation Device, AppWall Web Application Firewall, DefenseFlow Cyber Command and Control application, and DefensePipe Cloud Scrubbing Service. Its application delivery products include Alteon NG, LinkProof NG and FastView. Its management solutions include APSolute Vision, application performance monitoring and vDirect.

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