Shotspotter (NASDAQ: APPF) and AppFolio (NASDAQ:APPF) are both business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, institutional ownership, profitability, risk and dividends.

Institutional & Insider Ownership

53.0% of Shotspotter shares are owned by institutional investors. Comparatively, 27.9% of AppFolio shares are owned by institutional investors. 36.1% of Shotspotter shares are owned by company insiders. Comparatively, 42.0% of AppFolio shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Shotspotter and AppFolio’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shotspotter $23.76 million 18.40 -$9.98 million ($0.57) -71.21
AppFolio $143.80 million 18.36 $9.71 million $0.28 275.54

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

Profitability

This table compares Shotspotter and AppFolio’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shotspotter -19.52% -36.43% -13.84%
AppFolio 10.92% 20.10% 15.91%

Risk & Volatility

Shotspotter has a beta of -1.66, indicating that its stock price is 266% less volatile than the S&P 500. Comparatively, AppFolio has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Shotspotter and AppFolio, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shotspotter 0 0 6 0 3.00
AppFolio 1 1 0 0 1.50

Shotspotter presently has a consensus target price of $42.67, indicating a potential upside of 5.12%. AppFolio has a consensus target price of $56.00, indicating a potential downside of 27.41%. Given Shotspotter’s stronger consensus rating and higher possible upside, research analysts plainly believe Shotspotter is more favorable than AppFolio.

Summary

AppFolio beats Shotspotter on 9 of the 14 factors compared between the two stocks.

About Shotspotter

ShotSpotter, Inc. provides software-as-a-service based gunshot detection solutions for law enforcement officials and security personnel in the United States, South Africa, and internationally. The company's solutions include ShotSpotter Flex, an outdoor public safety solution for cities and municipalities to identify, locate, and deter gun violence by incorporating a real-time gunshot detection system into their policing systems; and SST SecureCampus that helps the law enforcement and security personnel serving universities, colleges, and other educational institutions to mitigate risk and enhance security by notifying authorities and first responders of an active-shooter. It also provides ShotSpotter SiteSecure, which serves various customers, such as corporations to safeguard their facilities; and public agencies focused on protecting critical infrastructure, including train stations, airports, and freeways. The company serves public safety customers and higher-education campuses through direct sales teams. ShotSpotter, Inc. was founded in 1996 and is headquartered in Newark, California.

About AppFolio

AppFolio, Inc. provides industry-specific cloud-based software solutions for small and medium-sized businesses in the property management and legal industries. It offers AppFolio Property Manager, a cloud-based software solution for the real estate market that provides property managers of various sizes and tools and services designed to streamline their property management businesses, such as posting and tracking vacancies, leasing vacant properties, and accounting, as well as facilitating tenant, owner, and vendor communications. The company also provides MyCase, a legal practice and case management solution that provides managing calendars, contacts and documents, time tracking, billing and collections, and communicating with clients and sharing sensitive and privileged materials for solo practitioners and small law firms. In addition, it offers Value+ services, such as its Website design, electronic payment services, tenant screening, insurance, contact center, premium leads, and tenant debt collections services. As of December 31, 2017, the company served 11,708 property manager customers; and 9,349 solo practitioners and small law firms. AppFolio, Inc. was founded in 2006 and is headquartered in Santa Barbara, California.

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