Bottomline Technologies (NASDAQ: EPAY) and Red Hat (NYSE:RHT) are both computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, analyst recommendations, institutional ownership, dividends, valuation and earnings.

Valuation & Earnings

This table compares Bottomline Technologies and Red Hat’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Bottomline Technologies $349.41 million 3.83 -$33.13 million ($0.70) -47.19
Red Hat $2.41 billion 9.31 $253.70 million $1.66 75.87

Red Hat has higher revenue and earnings than Bottomline Technologies. Bottomline Technologies 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 Recommendations

This is a breakdown of recent recommendations for Bottomline Technologies and Red Hat, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bottomline Technologies 0 1 4 0 2.80
Red Hat 1 8 22 0 2.68

Bottomline Technologies presently has a consensus target price of $33.25, suggesting a potential upside of 0.67%. Red Hat has a consensus target price of $112.48, suggesting a potential downside of 10.69%. Given Bottomline Technologies’ stronger consensus rating and higher possible upside, equities analysts plainly believe Bottomline Technologies is more favorable than Red Hat.

Risk and Volatility

Bottomline Technologies has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Red Hat has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Bottomline Technologies -7.51% 5.84% 2.54%
Red Hat 11.49% 25.27% 7.43%

Institutional & Insider Ownership

93.0% of Bottomline Technologies shares are held by institutional investors. Comparatively, 96.0% of Red Hat shares are held by institutional investors. 2.4% of Bottomline Technologies shares are held by insiders. Comparatively, 0.7% of Red Hat shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Red Hat beats Bottomline Technologies on 10 of the 14 factors compared between the two stocks.

Bottomline Technologies Company Profile

Bottomline Technologies (de), Inc. is engaged in providing a set of cloud-based business payment, digital banking, fraud prevention, payment and financial document solutions. The Company helps businesses pay and get paid. It offers hosted or Software as a Service (SaaS) solutions, as well as software designed to run on-site at the customer’s location. It operates through four segments: Payments and Transactional Documents, Hosted Solutions, Digital Banking and Other. The Payments and Transactional Documents segment is a supplier of software products that provide a range of financial business process management solutions, including making and collecting payments and generating and storing business documents. The Hosted Solutions segment provides customers with SaaS technology offerings. The Digital Banking segment provides solutions to banking and financial institution customers. The Other segment consists of its healthcare and cyber fraud and risk management operating segments.

Red Hat Company Profile

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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