Analyzing PagerDuty (NYSE:PD) and Rapid7 (NASDAQ:RPD)

PagerDuty (NYSE:PD) and Rapid7 (NASDAQ:RPD) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, earnings, profitability, analyst recommendations, institutional ownership, valuation and dividends.

Analyst Ratings

This is a summary of recent ratings and price targets for PagerDuty and Rapid7, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PagerDuty	3	7	3	0	2.00
Rapid7	3	17	2	0	1.95

PagerDuty presently has a consensus target price of $16.00, suggesting a potential upside of 143.35%. Rapid7 has a consensus target price of $12.53, suggesting a potential upside of 90.66%. Given PagerDuty’s stronger consensus rating and higher possible upside, analysts clearly believe PagerDuty is more favorable than Rapid7.

Risk and Volatility

PagerDuty has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Rapid7 has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.

Institutional and Insider Ownership

97.3% of PagerDuty shares are owned by institutional investors. Comparatively, 95.7% of Rapid7 shares are owned by institutional investors. 8.0% of PagerDuty shares are owned by company insiders. Comparatively, 2.4% of Rapid7 shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares PagerDuty and Rapid7’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PagerDuty	31.12%	10.27%	2.11%
Rapid7	2.72%	47.33%	3.01%

Earnings & Valuation

This table compares PagerDuty and Rapid7″s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PagerDuty	$467.50 million	1.29	-$54.46 million	$1.60	4.11
Rapid7	$859.79 million	0.50	$23.38 million	$0.36	18.25

Rapid7 has higher revenue and earnings than PagerDuty. PagerDuty is trading at a lower price-to-earnings ratio than Rapid7, indicating that it is currently the more affordable of the two stocks.

Summary

PagerDuty beats Rapid7 on 8 of the 14 factors compared between the two stocks.

About PagerDuty

PagerDuty, Inc. engages in the operation of a digital operations management platform in the United States and internationally. The company’s digital operations management platform collects data and digital signals from virtually any software-enabled system or device and leverage machine learning to correlate, process, and predict opportunities and issues. Its platform includes PagerDuty Incident Management that provides a real-time view across the status of a digital service while incorporating noise reduction to remove false positives; AIOps that applies machine learning to correlate and automate the identification of incidents from billions of events; Process Automation offers centralized design time and run time environment for orchestrating automated workflows that span across departments, technologies, and networks; Customer Service Operations, which is offered to orchestrate, automate, and scale responses to customer impacting issues. It serves various industries, including software and technology, telecommunications, retail, travel and hospitality, media and entertainment, and financial services. PagerDuty, Inc. was founded in 2009 and is headquartered in San Francisco, California.

About Rapid7

Rapid7, Inc. provides cybersecurity solutions under the Rapid7, Nexpose, and Metasploit brand names. The company offers endpoint to cloud data collection and sharing applications, such as Rapid7 Insight Agent, a software-based agent that is used on assets across on-premises and cloud environments to centralize and monitor data on company's platform; Rapid7 Insight Network Sensor that analyzes raw end-to-end network traffic to increase visibility into user activity, pinpoint real threats, and investigations; Rapid7 Cloud Event Data Harvesting that offers visibility into changes made to cloud resources; and third-party integrations and ecosystem, as well as orchestration and automation solutions. It also offers various platforms, including Rapid7 managed threat complete consisting of managed detection response that delivers end-to-end threat detection and response, as well as offloads day-to-day vulnerability management operations. In addition, it provides Rapid7 threat complete consisting of InsightIDR, a security information and event management, and extended detection and response solution; and InsightVM, a vulnerability management solution that provides visibility across on-premise and remote endpoints for security teams to evaluate the business risks, and configurations, and share with their IT counterparts for remediation. Further, the company offers Rapid7 cloud risk complete, which includes InsightCloudSec, a cloud risk and compliance management solution; and InsightAppSec, a dynamic application security testing tool. It also provides professional services. It serves a range of industries, including business services, pharmaceuticals, technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, travel and transportation, government, online services, telecommunications, and professional services. The company was incorporated in 2000 and is headquartered in Boston, Massachusetts.