Critical Review: National Instruments (NASDAQ:NATI) and SecureWorks (NASDAQ:SCWX)

National Instruments (NASDAQ:NATIGet Rating) and SecureWorks (NASDAQ:SCWXGet Rating) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.

Risk & Volatility

National Instruments has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, SecureWorks has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Earnings & Valuation

This table compares National Instruments and SecureWorks’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Instruments $1.47 billion 2.81 $89.32 million $0.82 38.34
SecureWorks $535.21 million 1.62 -$39.79 million ($0.66) -15.52

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

Analyst Ratings

This is a summary of recent ratings and target prices for National Instruments and SecureWorks, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Instruments 0 1 4 0 2.80
SecureWorks 3 3 0 0 1.50

National Instruments presently has a consensus target price of $48.20, indicating a potential upside of 53.31%. SecureWorks has a consensus target price of $15.00, indicating a potential upside of 46.48%. Given National Instruments’ stronger consensus rating and higher possible upside, equities analysts plainly believe National Instruments is more favorable than SecureWorks.

Institutional & Insider Ownership

89.8% of National Instruments shares are held by institutional investors. Comparatively, 11.9% of SecureWorks shares are held by institutional investors. 0.6% of National Instruments shares are held by insiders. Comparatively, 85.3% of SecureWorks shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares National Instruments and SecureWorks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Instruments 7.24% 15.52% 9.67%
SecureWorks -10.64% -4.66% -3.08%

Summary

National Instruments beats SecureWorks on 13 of the 14 factors compared between the two stocks.

About National Instruments (Get Rating)

National Instruments Corporation provides a software-centric platform and systems to engineers and scientists worldwide. Its programming environments software includes NI LabVIEW, a graphical software platform to visualize hardware configuration, measurement data, and debugging of application; NI LabWindows/CVI, an ANSI C integrated development environment and engineering toolbox; and NI Measurement Studio, a suite of .NET tools for building engineering applications in Microsoft Visual Studio. The company's application software comprises NI TestStand that is used for automated test and measurement applications in manufacturing environment; NI VeriStand, a software environment for configuring real-time testing applications; Flexlogger for sensor configuration and data logging of mixed signals; and NI InsightCM Enterprise, a software for monitoring ancillary rotating equipment. Its operations management and analytic enterprise software include NI DIAdem, which is configuration-based technical data management, analysis, and report generation tools to mine and analyze engineering and measurement data; NI SystemLink, a systems management and data collection software that enables the mass coordination of connected devices, software deployments, and data communications throughout a distributed system; and NI Optimal Plus. The company also offers PXI hardware form factor; and NI semiconductor test systems, as well as software and hardware maintenance, and training and certification services. It serves semiconductor, transportation, aerospace, and defense industries; and government agencies. National Instruments Corporation has strategic agreements with Konrad Technologies, Inc. to develop test systems and solutions for autonomous driving software and hardware validation; and Foretellix Ltd. to enhance the safety of advanced driver-assistance systems and autonomous vehicles. The company was incorporated in 1976 and is headquartered in Austin, Texas.

About SecureWorks (Get Rating)

SecureWorks Corp., through its subsidiaries, provides technology-driven information security solutions for protecting its customers in the United States and internationally. The company's solutions include software-as-a-service solutions, managed security services, and professional services, including incident response and security risk consulting services. Its solutions enable organizations to prevent security breaches, detect malicious activity, respond rapidly to security breaches, and identify emerging threats. The company sells its solutions primarily through its direct sales organization, as well as through referral agents, regional value-added resellers, and trade associations. It serves customers in a range of industries, including financial services, manufacturing, technology, retail, insurance, utility, and healthcare sectors. The company was formerly known as SecureWorks Holding Corporation and changed its name to SecureWorks Corp. in November 2015. SecureWorks Corp. was founded in 1999 and is headquartered in Atlanta, Georgia. SecureWorks Corp. operates as a subsidiary of Dell Marketing L.P.

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