Comparing Radware (NASDAQ:RDWR) & DigitalOcean (NYSE:DOCN)

Radware (NASDAQ:RDWR) and DigitalOcean (NYSE:DOCN) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Profitability

This table compares Radware and DigitalOcean’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Radware	6.71%	7.21%	4.17%
DigitalOcean	28.76%	-127.00%	8.88%

Institutional & Insider Ownership

73.1% of Radware shares are owned by institutional investors. Comparatively, 49.8% of DigitalOcean shares are owned by institutional investors. 21.6% of Radware shares are owned by company insiders. Comparatively, 1.0% of DigitalOcean shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Radware and DigitalOcean”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radware	$301.85 million	3.50	$20.26 million	$0.45	54.93
DigitalOcean	$901.43 million	5.56	$259.26 million	$2.53	21.52

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

Volatility & Risk

Radware has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500. Comparatively, DigitalOcean has a beta of 1.76, indicating that its share price is 76% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Radware and DigitalOcean, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radware	1	1	2	0	2.25
DigitalOcean	0	5	9	0	2.64

Radware presently has a consensus target price of $30.00, suggesting a potential upside of 21.36%. DigitalOcean has a consensus target price of $69.23, suggesting a potential upside of 27.15%. Given DigitalOcean’s stronger consensus rating and higher possible upside, analysts plainly believe DigitalOcean is more favorable than Radware.

Summary

DigitalOcean beats Radware on 10 of the 14 factors compared between the two stocks.

About Radware

Radware Ltd., together with its subsidiaries, develops, manufactures, and markets cyber security and application delivery solutions for cloud, on-premises, and software defined data centers worldwide. The company operates in two segments, Radware’s Core Business and The Hawks’ Business. It offers DefensePro provides automated DDoS protection; Radware Kubernetes, a web application firewall solution; and Cyber Controller, a unified solution for management, configuration, and attack lifecycle. The company also provides Alteon, an application delivery and security solution that manages application traffic across cloud and data center locations for optimizing availability and performance; and LinkProof NG, a multi-homing and enterprise gateway solution. In addition, it offers ERT Security Updates Subscription that provides protection from network elements, hosts, and applications; ERT Active Attackers Feed, a threat intelligence feed to protect against DDoS threats; ERT Protection Packages; Alteon Global Elastic License, a purchasing and deployment subscription; MSSP Portal, a DDoS detection and mitigation service portal; Location-based Mitigation that enables network traffic based on the geolocation mapping of IP subnets; and Cloud DDoS Protection Service, which offers a range of enterprise-grade DDoS protection services in the cloud. Further, the company provides Cloud Web DDoS Protection, Cloud WAF Service, Bot Manager, Cloud-Native Protector, and Cloud Application Protection Services, as well as technical support, professional, managed, and training and certification services. It sells its products primarily to independent distributors, including value added resellers, original equipment manufacturers, and system integrators. The company was founded in 1996 and is headquartered in Tel Aviv, Israel.

About DigitalOcean

DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC). The company also provides platform-as-a-service (PaaS) solutions, such as managed databases; managed Kubernetes and container registry; application platform to build, deploy, and scale applications; Functions, a serverless compute solution; and Uptime for real-time uptime and latency alerts, as well as software-as-a-service (SaaS), including managed hosting and DigitalOcean Marketplace, a platform where developers can find pre-configured applications and solutions. In addition, it offers artificial intelligence (AI)/machine learning (ML) applications comprising GPU virtual machines for scaling AI applications; Notebooks, a simple cloud workspace that runs on GPUs that provides a managed interactive development environment for exploring data, and training and building machine learning models; and Deployments for deploying their machine learning model as an API endpoint. The company’s customers include software engineers, researchers, data scientists, system administrators, students, and hobbyists. Its customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and AI/ML applications. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.