Gridsum (NASDAQ: GSUM) and The Ultimate Software Group (NASDAQ:ULTI) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, profitability, institutional ownership and valuation.

Profitability

This table compares Gridsum and The Ultimate Software Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gridsum -27.91% -19.63% -11.15%
The Ultimate Software Group 3.31% 6.84% 2.45%

Volatility and Risk

Gridsum has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, The Ultimate Software Group has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Valuation & Earnings

This table compares Gridsum and The Ultimate Software Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gridsum $57.65 million 3.62 -$9.74 million ($0.72) -11.50
The Ultimate Software Group $781.29 million 8.18 $30.25 million $0.97 220.49

The Ultimate Software Group has higher revenue and earnings than Gridsum. Gridsum is trading at a lower price-to-earnings ratio than The Ultimate Software Group, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

35.7% of Gridsum shares are held by institutional investors. 4.9% of The Ultimate Software Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Gridsum and The Ultimate Software Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gridsum 0 0 0 0 N/A
The Ultimate Software Group 1 4 16 0 2.71

The Ultimate Software Group has a consensus target price of $231.58, indicating a potential upside of 8.28%. Given The Ultimate Software Group’s higher possible upside, analysts plainly believe The Ultimate Software Group is more favorable than Gridsum.

Summary

The Ultimate Software Group beats Gridsum on 11 of the 12 factors compared between the two stocks.

Gridsum Company Profile

Gridsum Holding Inc. is a holding company. The Company provides data analysis software for multinational and domestic enterprises, and government agencies in China. The Company’s technology, the Gridsum Big Data Platform performs multi-dimensional correlation analysis and analyzes real-time events. The Company offers various types of solutions and technologies. The Company’s software products are designed for a range of commercial and governmental applications. The Company’s products focus on digital marketing analytics and automation solutions. The Company offers Web analytics solutions based on data warehouse technology to build solutions on a distributed data warehouse architecture, using the open-source Hadoop framework. The Company delivers its solutions as cloud-based software-as-a-service (SaaS) offerings that manage information technology (IT) support costs by outsourcing hardware and software maintenance and support.

The Ultimate Software Group Company Profile

The Ultimate Software Group, Inc. (Ultimate) is a cloud provider of people management solutions, referred to as human capital management (HCM). The Company’s UltiPro product suite (UltiPro) is an engaging solution that has human resources (HR), payroll and benefits management. As of December 31, 2016, UltiPro included global people management, available in 14 languages with more than 35 country-specific localizations. The solution is delivered through software-as-a-service (SaaS) to organizations based in the United States and Canada, including those with global workforces. The UltiPro solution includes feature sets for talent acquisition and onboarding, HR management and compliance, benefits management and online enrollment, payroll, performance management, compensation management with salary planning, budgeting, and development of incentive plans, succession management, reporting and analytical decision-making and predictive tools, and time and attendance.

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