Echelon (NASDAQ: ELON) and Proofpoint (NASDAQ:PFPT) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

This table compares Echelon and Proofpoint’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Echelon -14.96% -18.48% -13.66%
Proofpoint -20.19% -158.19% -7.03%

Valuation & Earnings

This table compares Echelon and Proofpoint’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Echelon $32.38 million 0.77 -$4.10 million ($1.05) -5.28
Proofpoint $375.50 million 10.60 -$111.20 million ($2.21) -40.19

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

Insider & Institutional Ownership

22.8% of Echelon shares are owned by institutional investors. 9.1% of Echelon shares are owned by company insiders. Comparatively, 6.0% of Proofpoint shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Echelon has a beta of -0.66, suggesting that its share price is 166% less volatile than the S&P 500. Comparatively, Proofpoint has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Echelon and Proofpoint, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Echelon 0 0 0 0 N/A
Proofpoint 1 3 21 0 2.80

Proofpoint has a consensus target price of $102.41, indicating a potential upside of 15.31%. Given Proofpoint’s higher possible upside, analysts clearly believe Proofpoint is more favorable than Echelon.

Echelon Company Profile

Echelon Corporation develops open-standard control networking platforms and delivers elements necessary to design, install, monitor and control communities of devices. The Company’s products enable everyday devices, such as air conditioners, outdoor lighting, appliances, electricity meters, light switches, thermostats and valves to be inter-connected and be part of the Industrial Internet of Things (IIoT) market. It operates through the IIoT segment. Its IIoT business sells products and services that form embedded control platforms, such as LONWORKS and IzoT. The Company’s IIoT business also sells products and services, which include components, control nodes and development software. The Company also offers a solution consisting of outdoor lighting controllers, segment controllers, gateways and software to end customers, such as municipalities, cities, campuses and commercial enterprises. The Company markets its products under the Echelon brand.

Proofpoint Company Profile

Proofpoint, Inc. is a security-as-a-service provider that enables large and mid-sized organizations to defend, protect, archive and govern their sensitive data. The Company’s security-as-a-service platform consists of an integrated suite of on-demand data protection solutions, including threat protection, incident response, regulatory compliance, archiving, governance, eDiscovery and secure communication. The Company’s solutions are built on a cloud-based platform. The Company provides a multi-tiered security-as-a-service platform, including solutions, platform technologies and infrastructure. Its product families include Email Security, Proofpoint Advanced Threat Protection, Proofpoint Information Protection and Archiving, and Proofpoint Digital Risk Protection. The Company’s platform services include Threat detection, Threat intel extraction, Nexus threat graph, Real-time detection, Information classification and Intelligent policy.

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