Critical Analysis: Sonic Foundry (SOFO) vs. Its Rivals

Sonic Foundry (NASDAQ:SOFO) is one of 41 publicly-traded companies in the “Radio & t.v. communications equipment” industry, but how does it contrast to its peers? We will compare Sonic Foundry to similar companies based on the strength of its institutional ownership, risk, profitability, dividends, analyst recommendations, valuation and earnings.

Profitability

This table compares Sonic Foundry and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonic Foundry	-79.62%	-555.89%	-68.23%
Sonic Foundry Competitors	-49.62%	33.82%	-5.10%

Valuation & Earnings

This table compares Sonic Foundry and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Sonic Foundry	$23.04 million	-$7.08 million	-0.47
Sonic Foundry Competitors	$13.06 billion	$811.68 million	6.17

Sonic Foundry’s peers have higher revenue and earnings than Sonic Foundry. Sonic Foundry is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional and Insider Ownership

16.6% of Sonic Foundry shares are owned by institutional investors. Comparatively, 49.7% of shares of all “Radio & t.v. communications equipment” companies are owned by institutional investors. 46.5% of Sonic Foundry shares are owned by insiders. Comparatively, 21.0% of shares of all “Radio & t.v. communications equipment” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Sonic Foundry and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonic Foundry	0	0	1	0	3.00
Sonic Foundry Competitors	333	1563	2482	115	2.53

Sonic Foundry presently has a consensus target price of $3.00, suggesting a potential upside of 306.50%. As a group, “Radio & t.v. communications equipment” companies have a potential upside of 18.58%. Given Sonic Foundry’s stronger consensus rating and higher possible upside, research analysts clearly believe Sonic Foundry is more favorable than its peers.

Risk and Volatility

Sonic Foundry has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, Sonic Foundry’s peers have a beta of -3.65, suggesting that their average stock price is 465% less volatile than the S&P 500.

Summary

Sonic Foundry peers beat Sonic Foundry on 8 of the 13 factors compared.

About Sonic Foundry

Sonic Foundry, Inc. provides video capture, management, and streaming solutions in the United States, Europe, the Middle East, Asia, and internationally. The company offers Video Capture solutions, including Mediasite Recorder and Recorder Pro that are built-in room appliances used in schedule-based capture and advanced audio/video integration; Mediasite Mobile Recorders, a portable recording device used to capture and stream broadcast-quality video; and Mediasite Mosaic & Mosaic Pro that allows instructors, employees, and students to create videos, screencasts, and slideshows from their computers or mobile devices. It also provides Video Management and Delivery solutions to manage, search, analyze, publish, and stream video content; and Mediasite Cloud, a Software as a Service solution to host and manage customers' content. It markets its products to educational institutions, corporations, and government entities through reseller networks, direct sales, and partnerships with system integrators. The company was founded in 1991 and is headquartered in Madison, Wisconsin.