Financial Survey: DigitalOcean (NYSE:DOCN) versus JFrog (NASDAQ:FROG)

DigitalOcean (NYSE:DOCN) and JFrog (NASDAQ:FROG) are both mid-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Institutional & Insider Ownership

49.8% of DigitalOcean shares are owned by institutional investors. Comparatively, 85.0% of JFrog shares are owned by institutional investors. 1.0% of DigitalOcean shares are owned by insiders. Comparatively, 14.1% of JFrog shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares DigitalOcean and JFrog”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DigitalOcean	$780.61 million	4.36	$84.49 million	$1.30	28.78
JFrog	$428.49 million	13.10	-$69.24 million	($0.77)	-62.43

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

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DigitalOcean	1	6	6	0	2.38
JFrog	1	2	15	0	2.78

DigitalOcean currently has a consensus target price of $41.45, suggesting a potential upside of 10.79%. JFrog has a consensus target price of $50.25, suggesting a potential upside of 4.54%. Given DigitalOcean’s higher possible upside, research analysts clearly believe DigitalOcean is more favorable than JFrog.

Volatility & Risk

DigitalOcean has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500. Comparatively, JFrog has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DigitalOcean	15.18%	-73.19%	8.98%
JFrog	-18.18%	-7.54%	-5.20%

Summary

DigitalOcean beats JFrog on 8 of the 14 factors compared between the two stocks.

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.

About JFrog

JFrog Ltd. provides end-to-end hybrid software supply chain platform in the United States, Israel, India, and internationally. The company offers JFrog Artifactory, a package repository that allows teams and organizations to store, update, and manage their software packages; JFrog Curation that functions as a guardian outside the software development pipeline, controlling the admission of packages into an organization, primarily from open source or public repositories; JFrog Xray, which scans JFrog Artifactory to secure all software packages; JFrog Advanced Security, an optional add-on for select JFrog subscriptions; and JFrog Distribution that provides software package distribution. It also provides JFrog Artifactory Edge that utilizes and leverages metadata from JFrog Artifactory to facilitate the transfer of the incremental changes in software packages from their previous versions; JFrog Mission Control, a platform control panel that provides a view of moving pieces of an organization’s software supply chain workflow; JFrog Insight, a DevOps intelligence tool; JFrog Connect, a device management solution that allows companies to manage software updates and monitor performance in IoT device fleets; and JFrog Pipelines, a continuous integration and delivery tool for automating and orchestrating the movement of software packages. In addition, the company provides JFrog Pro that provides access to the universal version of JFrog Artifactory and ongoing updates, upgrades, and bug fixes; JFrog Pro X, a self-hosted-only subscription; JFrog Enterprise X, which offers cluster configuration, federated repositories, multi-region replication, larger enterprise-scale deployments, service-level agreement support, and deeper security; and JFrog Enterprise Plus, a full platform subscription option. It serves technology, financial services, retail, healthcare, and telecommunications organizations. JFrog Ltd. was incorporated in 2008 and is headquartered in Sunnyvale, California.