Q2 Holdings (NYSE: QTWO) and Hortonworks (NASDAQ:HDP) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, profitability, institutional ownership, valuation and risk.

Institutional & Insider Ownership

92.2% of Q2 Holdings shares are held by institutional investors. Comparatively, 48.0% of Hortonworks shares are held by institutional investors. 24.5% of Q2 Holdings shares are held by company insiders. Comparatively, 22.5% of Hortonworks shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Q2 Holdings and Hortonworks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Q2 Holdings 0 3 6 0 2.67
Hortonworks 0 3 11 0 2.79

Q2 Holdings currently has a consensus target price of $46.13, indicating a potential upside of 7.14%. Hortonworks has a consensus target price of $20.42, indicating a potential upside of 11.93%. Given Hortonworks’ stronger consensus rating and higher probable upside, analysts clearly believe Hortonworks is more favorable than Q2 Holdings.

Profitability

This table compares Q2 Holdings and Hortonworks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Q2 Holdings -15.27% -20.50% -10.45%
Hortonworks -89.35% -765.37% -94.91%

Valuation & Earnings

This table compares Q2 Holdings and Hortonworks’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Q2 Holdings $150.22 million 11.94 -$36.35 million ($0.69) -62.39
Hortonworks $184.46 million 6.97 -$251.68 million ($3.37) -5.41

Q2 Holdings has higher revenue, but lower earnings than Hortonworks. Q2 Holdings is trading at a lower price-to-earnings ratio than Hortonworks, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Q2 Holdings has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Hortonworks has a beta of 1.58, indicating that its share price is 58% more volatile than the S&P 500.

Summary

Q2 Holdings beats Hortonworks on 8 of the 13 factors compared between the two stocks.

Q2 Holdings Company Profile

Q2 Holdings, Inc. is a provider of cloud-based digital banking solutions. The Company enables regional and community financial institutions (RCFIs), to deliver a suite of integrated digital banking services. The Company’s solutions all operate on a common platform that supports the delivery of unified digital banking services across online, mobile and voice channels. Its platform provides a single point of management enabling RCFIs to deliver targeted experiences, including tailored rights, features and branding to account holders. Its cloud-based solutions and common platform provide its RCFI customers with a view of account holder access and activity across devices and channels. Its solutions include Q2online, Q2 Risk & Fraud Analytics, Q2 Corporate, Q2 SMART, Q2mobility Application, Q2mobile Remote Deposit Capture, Q2text, Q2themes, Q2clarity, Centrix Dispute Tracking System (DTS), Centrix Payments I.Q. System (PIQS), and Centrix Exact/Transaction Management System (Exact/TMS).

Hortonworks Company Profile

Hortonworks, Inc. is a provider and distributor of enterprise-scale data management software platforms. The Company’s product offerings include Hortonworks Data Platform (HDP), Hortonworks Sandbox and Hortonworks DataFlow Platform (HDF). It provides support subscription offerings and related professional services for its enterprise-scale Connected Data Platforms, such as HDP and HDF. Its Data at Rest solution, the HDP, is an enterprise-scale data management platform built entirely on open source software, including Apache Hadoop. HDP combines computer servers with local storage and open source software technology to create a distributed compute and storage platform for data sets that is secure and scalable over petabytes of data within thousands of servers or nodes. Its Data in Motion solution, the HDF, is an enterprise-scale data ingest platform built entirely on open source software, including Apache NiFi.

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