Model N (NYSE:MODN) and Facebook (NASDAQ:FB) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Institutional and Insider Ownership

72.8% of Model N shares are held by institutional investors. Comparatively, 60.2% of Facebook shares are held by institutional investors. 1.2% of Model N shares are held by insiders. Comparatively, 16.3% of Facebook shares are held by 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.

Valuation & Earnings

This table compares Model N and Facebook’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Model N $154.63 million 3.59 -$28.20 million ($0.73) -24.11
Facebook $55.84 billion 8.63 $22.11 billion $7.57 21.91

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

Profitability

This table compares Model N and Facebook’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Model N -18.37% -51.86% -13.18%
Facebook 39.60% 27.51% 23.97%

Volatility & Risk

Model N has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Facebook has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Model N and Facebook, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Model N 0 2 6 0 2.75
Facebook 3 7 37 0 2.72

Model N presently has a consensus target price of $22.71, indicating a potential upside of 29.06%. Facebook has a consensus target price of $191.13, indicating a potential upside of 15.23%. Given Model N’s stronger consensus rating and higher possible upside, research analysts clearly believe Model N is more favorable than Facebook.

Summary

Facebook beats Model N on 11 of the 14 factors compared between the two stocks.

Model N Company Profile

Model N, Inc. provides revenue management cloud solutions for the life sciences and technology companies. The company's cloud-based revenue management solutions include Revenue Cloud for Pharma, Revenue Cloud for Med Tech, and Revenue Cloud for Semiconductors and High Tech Manufacturing. It develops software applications, such as managed care and government pricing for life science companies; and channel incentives for technology companies. The company also offers revenue management processes, such as pricing, contracting, rebates, incentives, channel management, and regulatory compliance. In addition, Model N, Inc. provides implementation, managed, strategic, and customer support services. It primarily serves large and mid-sized organizations worldwide through its direct sales force. Model N, Inc. was founded in 1999 and is headquartered in San Mateo, California, with additional offices in the United States, India, and Switzerland.

Facebook Company Profile

Facebook, Inc. provides various products to connect and share through mobile devices, personal computers, and other surfaces worldwide. The company's products include Facebook that enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers; Instagram, a community for sharing photos, videos, and messages; Messenger, a messaging application for people to connect with friends, family, groups, and businesses across platforms and devices; and WhatsApp, a messaging application for use by people and businesses to communicate in a private way. It also provides Oculus, a hardware, software, and developer ecosystem, which allows people to come together and connect with each other through its Oculus virtual reality products. As of December 31, 2018, it had approximately 1.52 billion daily active users. The company was founded in 2004 and is headquartered in Menlo Park, California.

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