Rosetta Stone (NYSE: RST) is one of 65 public companies in the “Application Software” industry, but how does it weigh in compared to its competitors? We will compare Rosetta Stone to similar businesses based on the strength of its analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Insider and Institutional Ownership

73.0% of Rosetta Stone shares are owned by institutional investors. Comparatively, 68.6% of shares of all “Application Software” companies are owned by institutional investors. 14.5% of Rosetta Stone shares are owned by company insiders. Comparatively, 15.7% of shares of all “Application Software” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Rosetta Stone and its competitors’ 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%
Rosetta Stone Competitors -62.31% -92.19% -16.43%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Rosetta Stone and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rosetta Stone 0 0 1 0 3.00
Rosetta Stone Competitors 179 1515 2878 96 2.62

Rosetta Stone presently has a consensus price target of $15.00, suggesting a potential upside of 52.91%. As a group, “Application Software” companies have a potential upside of 5.35%. Given Rosetta Stone’s stronger consensus rating and higher possible upside, equities analysts clearly believe Rosetta Stone is more favorable than its competitors.

Risk and Volatility

Rosetta Stone has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500. Comparatively, Rosetta Stone’s competitors have a beta of 1.61, suggesting that their average stock price is 61% more volatile than the S&P 500.

Valuation and Earnings

This table compares Rosetta Stone and its competitors revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Rosetta Stone $193.97 million $2.56 million -18.51
Rosetta Stone Competitors $761.46 million $137.65 million -12.42

Rosetta Stone’s competitors have higher revenue and earnings than Rosetta Stone. Rosetta Stone is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Rosetta Stone Company Profile

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.

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