Nice (NICE) & Red Hat (RHT) Critical Contrast

Nice (NASDAQ: NICE) and Red Hat (NYSE:RHT) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, institutional ownership, risk and valuation.

Earnings & Valuation

This table compares Nice and Red Hat’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nice $1.02 billion 5.28 $116.92 million $1.46 61.18
Red Hat $2.41 billion 9.09 $253.70 million $1.83 67.17

Red Hat has higher revenue and earnings than Nice. Nice 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 Ratings

This is a summary of recent recommendations for Nice and Red Hat, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nice 0 7 2 0 2.22
Red Hat 1 8 22 0 2.68

Nice currently has a consensus target price of $86.25, suggesting a potential downside of 3.44%. Red Hat has a consensus target price of $125.31, suggesting a potential upside of 1.94%. Given Red Hat’s stronger consensus rating and higher possible upside, analysts plainly believe Red Hat is more favorable than Nice.

Volatility and Risk

Nice has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Red Hat has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Dividends

Nice pays an annual dividend of $0.13 per share and has a dividend yield of 0.1%. Red Hat does not pay a dividend. Nice pays out 8.9% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Nice 7.12% 9.71% 5.72%
Red Hat 12.14% 26.23% 7.66%

Insider and Institutional Ownership

45.0% of Nice shares are owned by institutional investors. Comparatively, 93.6% of Red Hat shares are owned by institutional investors. 0.0% of Nice shares are owned by insiders. Comparatively, 0.7% of Red Hat 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.

Summary

Red Hat beats Nice on 15 of the 16 factors compared between the two stocks.

About Nice

NICE Ltd., formerly NICE-Systems Ltd., is a global enterprise software provider. The Company’s segments include Customer Interactions Solutions, and Financial Crime and Compliance Solutions. The Customer Interactions Solutions segment provides data driven insights that enable businesses to deliver personalized experience to customers. The Financial Crime and Compliance Solutions segment provides real time and cross-channel fraud prevention, anti-money laundering, brokerage compliance and enterprise-wide case management. The Company serves contact centers, back office operations and retail branches, covering various industries, including communications, banking, insurance, healthcare, business processes outsourcing (BPO), government, utilities, travel and entertainment. Its Multi-Channel Recording and Interaction Management enables organizations to capture structured and unstructured customer interaction and transaction data from multiple channels.

About Red Hat

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

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