Splunk (SPLK) and Synopsys (SNPS) Critical Survey

Splunk (NASDAQ: SPLK) and Synopsys (NASDAQ:SNPS) are both large-cap technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Profitability

This table compares Splunk and Synopsys’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Splunk -32.72% -72.06% -32.67%
Synopsys 5.01% 5.78% 3.55%

Risk and Volatility

Splunk has a beta of 2.07, meaning that its stock price is 107% more volatile than the S&P 500. Comparatively, Synopsys has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Splunk and Synopsys, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Splunk 0 6 28 0 2.82
Synopsys 1 0 7 0 2.75

Splunk presently has a consensus price target of $83.47, suggesting a potential downside of 6.69%. Synopsys has a consensus price target of $97.63, suggesting a potential upside of 8.82%. Given Synopsys’ higher possible upside, analysts clearly believe Synopsys is more favorable than Splunk.

Institutional & Insider Ownership

90.8% of Synopsys shares are owned by institutional investors. 1.4% of Splunk shares are owned by company insiders. Comparatively, 1.8% of Synopsys shares are owned 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 and Valuation

This table compares Splunk and Synopsys’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Splunk $949.96 million 13.32 -$355.18 million ($2.23) -40.11
Synopsys $2.72 billion 4.90 $136.56 million $0.86 104.31

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

Summary

Synopsys beats Splunk on 10 of the 14 factors compared between the two stocks.

About Splunk

Splunk Inc. (Splunk) is engaged in the development and marketing of software solutions. The Company’s offerings enable users to collect, index, search, explore, monitor and analyze data. Its offerings address diverse data sets that are referred to as big data and are specifically used for machine data. Machine data is produced by various software application and electronic devices in an organization and contains a definitive, time-stamped record of various activities, such as transactions, customer and user activities and security threats. Its products help users in various roles, including information technology (IT), security and business professionals, to analyze their machine data and achieve real-time visibility into and intelligence about their organization’s operations. In addition, the Company offers user behavioral analytics to help detect, respond to and mitigate advanced, hidden and insider threats. The Company offers Splunk Enterprise, which is a machine data platform.

About Synopsys

Synopsys, Inc. provides software, intellectual property (IP) and services. The Company supplies the electronic design automation (EDA) software that engineers use to design and test integrated circuits, also known as chips. It also offers IP products, which are pre-designed circuits that engineers use as components of larger chip designs rather than designing those circuits themselves. It provides software and hardware used to develop the electronic systems that incorporate chips and the software that runs on them. It provides technical services to support its solutions and help its customers develop chips and electronic systems. It is also a provider of software tools that developers use to develop software code in a range of industries, including electronics, financial services, energy, and industrials. It offers products and services in four categories: core EDA; IP, Systems and Software Integrity; Manufacturing Solutions, and Professional Services and Other.

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