Critical Review: Rekor Systems (NASDAQ:REKR) versus Zscaler (NASDAQ:ZS)

Rekor Systems (NASDAQ:REKR) and Zscaler (NASDAQ:ZS) are both technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, risk, earnings, dividends, analyst recommendations, institutional ownership and valuation.

Institutional & Insider Ownership

45.7% of Rekor Systems shares are held by institutional investors. Comparatively, 46.5% of Zscaler shares are held by institutional investors. 3.2% of Rekor Systems shares are held by company insiders. Comparatively, 17.2% of Zscaler shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Rekor Systems and Zscaler’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rekor Systems	-43.84%	-59.05%	-27.37%
Zscaler	-1.88%	1.23%	0.40%

Volatility and Risk

Rekor Systems has a beta of 1.79, suggesting that its stock price is 79% more volatile than the S&P 500. Comparatively, Zscaler has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Rekor Systems and Zscaler, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rekor Systems	1	0	0	0	1.00
Zscaler	2	6	34	0	2.76

Zscaler has a consensus price target of $216.53, suggesting a potential upside of 11.67%. Given Zscaler’s stronger consensus rating and higher possible upside, analysts plainly believe Zscaler is more favorable than Rekor Systems.

Earnings & Valuation

This table compares Rekor Systems and Zscaler”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rekor Systems	$48.45 million	1.25	-$31.46 million	($0.16)	-2.74
Zscaler	$3.35 billion	9.43	-$63.18 million	($0.39)	-497.15

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

Summary

Zscaler beats Rekor Systems on 10 of the 14 factors compared between the two stocks.

About Rekor Systems

Rekor Systems, Inc., a technology company, provides infrastructure solutions for transportation, public safety, and urban mobility markets in the United States and internationally. The company's platforms include Rekor One, an AI-powered roadway intelligence platform; Rekor Command, a comprehensive cross-agency platform that offers various applications for traffic management centers, freeway service patrol, first responders, and maintenance crews; Rekor Discover, a platform that ingests data from its hardware and automates comprehensive analytics and actionable insights about the movement of objects across the roadway; and Rekor Scout platform, which automates previously manual processes with collaborative solutions that keep all stakeholders apprised of developing situations and accelerate reaction times to incidents and offenders. It also offers Rekor AutoNotice, a cloud-based financial management application that delivers a turnkey information and citation management solution for cities, states, and municipalities for primary and secondary offenses; and Rekor CarCheck, which allows its AI based vehicle and license plate recognition technology to be accessed for a range of commercial applications. In addition, the company offers Rekor Edge Max System, a fixed traffic data collection system that captures and transforms roadway data into holistic traffic insights; Rekor Edge Pro, a vehicle recognition solution that is used on a standalone basis or integrated into a network; and Rekor Edge Flex, a portable data collection system. Further, it provides traffic services, including traditional traffic studies, which delivers data and insights for planning and management of roadway infrastructure and commercial initiatives; innovative AI-driven traffic studies for traffic management; and traffic engineering services. The company was incorporated in 2017 and is headquartered in Columbia, Maryland.

About Zscaler

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that provides users, workloads, IoT, and OT devices secure access to externally managed applications, including software-as-a-service (SaaS) applications and internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also provides Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. In addition, the company offers Posture Control solutions comprising Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and PaaS to reduce risk and ensure compliance with industry and organizational benchmarks; Cloud Infrastructure Entitlement Management that detects and remediates excessive or unused cloud permissions and enforces least privileged access without disrupting productivity; Infrastructure as Code (IaC), which analyzes IaC templates to identify misconfigurations and other security issues prior to deployment to cloud infrastructure; and Vulnerability Scanning and Data Loss Prevention solutions. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. The company serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.