Contrasting SunCar Technology Group (NASDAQ:SDA) & Rackspace Technology (NASDAQ:RXT)

Rackspace Technology (NASDAQ:RXT) and SunCar Technology Group (NASDAQ:SDA) are both small-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings for Rackspace Technology and SunCar Technology Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rackspace Technology	1	2	0	0	1.67
SunCar Technology Group	1	1	1	0	2.00

Rackspace Technology currently has a consensus target price of $2.70, indicating a potential downside of 39.33%. SunCar Technology Group has a consensus target price of $5.00, indicating a potential upside of 496.73%. Given SunCar Technology Group’s stronger consensus rating and higher probable upside, analysts plainly believe SunCar Technology Group is more favorable than Rackspace Technology.

Insider and Institutional Ownership

82.5% of Rackspace Technology shares are owned by institutional investors. Comparatively, 0.3% of SunCar Technology Group shares are owned by institutional investors. 2.3% of Rackspace Technology shares are owned by insiders. Comparatively, 22.2% of SunCar Technology Group shares are owned 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.

Volatility and Risk

Rackspace Technology has a beta of 2.99, meaning that its stock price is 199% more volatile than the S&P 500. Comparatively, SunCar Technology Group has a beta of -0.14, meaning that its stock price is 114% less volatile than the S&P 500.

Profitability

This table compares Rackspace Technology and SunCar Technology Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rackspace Technology	-5.41%	N/A	-1.55%
SunCar Technology Group	0.04%	0.21%	0.07%

Earnings and Valuation

This table compares Rackspace Technology and SunCar Technology Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rackspace Technology	$2.69 billion	0.42	-$225.80 million	($0.61)	-7.30
SunCar Technology Group	$517.86 million	0.17	-$3.94 million	N/A	N/A

SunCar Technology Group has lower revenue, but higher earnings than Rackspace Technology.

Summary

SunCar Technology Group beats Rackspace Technology on 8 of the 12 factors compared between the two stocks.

About Rackspace Technology

Rackspace Technology, Inc. operates as a multi cloud technology services company in the Americas, Europe, the Middle East, Africa, and The Asia-Pacific region. It operates through three segments: Multicloud Services, Apps & Cross Platform, and OpenStack Public Cloud. The company provides public and private cloud managed services, which allow customers to determine, manage, and optimize the right infrastructure, platforms, and services; professional services related to designing and building multi cloud solutions and cloud-native applications; and managed hosting and colocation services. It also helps customers establish governance, operational, and architectural frameworks to mitigate risks and reduce inefficiencies to manage costs, achieve industry-specific compliance objectives, and enhance security. In addition, the company offers managed applications, including running large-scale SaaS applications for customers on its and public cloud infrastructure; managed security services in the areas of security threat assessment and prevention, threat detection and response, rapid remediation, governance, and risk and compliance assistance across multiple cloud platforms, as well as privacy and data protection services, including detailed access restrictions and reporting; data services; and professional services related to designing and implementing application, security, and data services. Rackspace Technology, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.

About SunCar Technology Group

SunCar Technology Group Inc., through its subsidiaries, provides digitalized automotive after-sales service and online insurance intermediation services in the People's Republic of China. It operates through three segments: Insurance Intermediation Business; Automotive After-Sales Business; and Technology Business. The company offers customized after-sale services to banking, insurance companies, and other customer types; and auto mobile insurance comprising statutory automobile liability insurance and commercial automobile insurance. In addition, it provides auto insurance SaaS products and other technical services. The company is based in Shanghai, China.