Head to Head Comparison: Q2 (NYSE:QTWO) and Alarm.com (NASDAQ:ALRM)

Q2 (NYSE:QTWO) and Alarm.com (NASDAQ:ALRM) are both mid-cap technology companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Institutional & Insider Ownership

91.7% of Alarm.com shares are held by institutional investors. 0.9% of Q2 shares are held by company insiders. Comparatively, 4.8% of Alarm.com shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Q2 and Alarm.com, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Q2	0	3	9	1	2.85
Alarm.com	1	2	0	2	2.60

Q2 presently has a consensus target price of $76.17, suggesting a potential upside of 35.48%. Alarm.com has a consensus target price of $55.00, suggesting a potential upside of 3.03%. Given Q2’s stronger consensus rating and higher probable upside, analysts clearly believe Q2 is more favorable than Alarm.com.

Profitability

This table compares Q2 and Alarm.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Q2	10.87%	17.04%	8.80%
Alarm.com	11.11%	15.65%	7.04%

Valuation and Earnings

This table compares Q2 and Alarm.com”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Q2	$846.20 million	4.14	$52.01 million	$1.40	40.16
Alarm.com	$1.06 billion	2.49	$132.57 million	$2.26	23.62

Alarm.com has higher revenue and earnings than Q2. Alarm.com is trading at a lower price-to-earnings ratio than Q2, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Q2 has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Alarm.com has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.

Summary

Q2 beats Alarm.com on 8 of the 15 factors compared between the two stocks.

About Q2

Q2 Holdings, Inc. provides cloud-based digital solutions to regional and community financial institutions in the United States. The company offers Digital Banking Platform, an end-to-end digital banking platform supports its financial institution customers in their delivery of unified digital banking services across digital channels. Its digital banking platform solutions, comprising Q2 Consumer Banking, Q2 Small Business and Commercial, Q2mobile Remote Deposit Capture, Q2 Sentinel, Q2 Patrol, Q2 SMART, Q2 Contextual Personal Financial Management, Q2 Goals, Q2 CardSwap, Q2 Gro, Q2 Innovation Studio, Q2 Biller Direct, ClickSWITCH, Sensibill, Centrix Dispute Tracking System, Centrix Payments I.Q. System, and Centrix Exact/Transaction Management System. The company also provides lending solutions, which consists precisionlender solutions, a cloud-based platform, data-driven sales enablement, relationship pricing, and portfolio management solution includes precisionlender platform, premium treasury pricing, data studio, and Andi; and Q2 Cloud Lending solutions, a cloud-based digital lending platform and end-to-end lending solution that allows financial institutions, FinTechs, and Alt-FIs to automate and digitize their lending activities, supporting digital lending applications, scoring, underwriting, servicing, and collections for multiple assets classes comprising Q2 CL portal, originate, loan, marketplace, and collections. In addition, it offers Q2 Innovation Studio, an application program interface, or API, based and software development kit, or SDK, based open technology platform; and Helix, a cloud-native, real-time core processing platform. The company was formerly known as CBG Holdings, Inc. and changed its name to Q2 Holdings, Inc. in March 2013. Q2 Holdings, Inc. was founded in 2004 and is headquartered in Austin, Texas.

About Alarm.com

Alarm.com Holdings, Inc. provides various Internet of Things (IoT) and solutions for residential, multi-family, small business, and enterprise commercial markets in North America and internationally. The company operates through two segments, Alarm.com and Other. It offers solutions to control and monitor security systems, as well as to IoT devices, including door locks, garage doors, thermostats, and video cameras; and video monitoring and analytics solutions, such as video analytics, escalated events, video doorbells, intelligent integration, live streaming, secure cloud storage, and video alerts. The company also provides scenes, video analytics triggers, thermostat schedules, responsive savings, precision comfort, energy usage monitoring, places feature, whole home water safety, and solar monitoring solutions, as well as heating, ventilation, and air conditioning monitoring services. In addition, it offers demand response programs, commercial grade video, commercial video analytics, access control, cell connectors, enterprise dashboard and multi-site management, energy savings, protection for valuables and inventory, temperature monitoring, and daily safeguard solutions. Further, the company provides a permission-based online portal that provides account management, sales, marketing, training, and support tools; a unified interface that displays key operational and customer experience indicators, including technician performance, system reliability and customer engagement metrics; installation and support services; MobileTech Application and Remote Toolkit; video health reports; smart gateway; AI-powered enhancements to professional monitoring and false alarm reduction; Web services and business intelligence; sales, marketing, and training services; and home builder programs. Additionally, it offers electric utility grid and water management, indoor gunshot detection, and health and wellness and data-rich emergency response solutions. The company was founded in 2000 and is based in Tysons, Virginia.