Rosetta Stone (NYSE: RST) and Interactive Intelligence Group (NASDAQ:ININ) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Institutional & Insider Ownership

73.0% of Rosetta Stone shares are held by institutional investors. Comparatively, 83.2% of Interactive Intelligence Group shares are held by institutional investors. 14.5% of Rosetta Stone shares are held by insiders. Comparatively, 21.4% of Interactive Intelligence Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Rosetta Stone and Interactive Intelligence Group’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%
Interactive Intelligence Group -4.92% -12.52% -4.48%

Earnings and Valuation

This table compares Rosetta Stone and Interactive Intelligence Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rosetta Stone $193.97 million 1.11 $2.56 million ($0.53) -18.25
Interactive Intelligence Group N/A N/A N/A ($1.47) -41.16

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

Volatility and Risk

Rosetta Stone has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Interactive Intelligence Group has a beta of 1.89, indicating that its share price is 89% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Rosetta Stone and Interactive Intelligence Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rosetta Stone 0 0 1 0 3.00
Interactive Intelligence Group 0 1 0 0 2.00

Rosetta Stone currently has a consensus target price of $15.00, indicating a potential upside of 55.12%. Given Rosetta Stone’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Rosetta Stone is more favorable than Interactive Intelligence Group.

Summary

Interactive Intelligence Group beats Rosetta Stone on 6 of the 11 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 Interactive Intelligence Group

Interactive Intelligence Group, Inc. is a provider of software and cloud services for customer engagement, communications and collaboration. The Company operates in the segment of interaction management software solutions licensing and associated services. It offers approximately three types of products, including on-premises software; a single-tenant cloud service, and a multi-tenant cloud service. The Company’s offerings are used across a range of vertical industries, including accounts receivable management, banking, government, healthcare, insurance, manufacturing, utilities and retail. Its PureCloud Engage is an omnichannel customer engagement cloud service designed for contact centers of all sizes. Its PureCloud Communicate is a communications and collaboration cloud service for enterprises of all sizes designed to support connected workforce. Its on-premises and single-tenant cloud products are available in approximately 24 languages and deployed in over 125 countries.

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