Inspired Entertainment (NASDAQ:INSE – Get Free Report) and Rackspace Technology (NASDAQ:RXT – Get Free Report) are both small-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.
Analyst Recommendations
This is a summary of recent ratings and target prices for Inspired Entertainment and Rackspace Technology, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Inspired Entertainment | 0 | 3 | 4 | 1 | 2.75 |
| Rackspace Technology | 2 | 4 | 0 | 0 | 1.67 |
Inspired Entertainment presently has a consensus target price of $14.00, suggesting a potential upside of 68.07%. Rackspace Technology has a consensus target price of $1.51, suggesting a potential downside of 9.97%. Given Inspired Entertainment’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Inspired Entertainment is more favorable than Rackspace Technology.
Volatility & Risk
Insider & Institutional Ownership
77.4% of Inspired Entertainment shares are held by institutional investors. Comparatively, 82.5% of Rackspace Technology shares are held by institutional investors. 13.1% of Inspired Entertainment shares are held by insiders. Comparatively, 2.9% of Rackspace Technology shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Profitability
This table compares Inspired Entertainment and Rackspace Technology’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Inspired Entertainment | 18.78% | -1,176.67% | 15.10% |
| Rackspace Technology | -9.43% | N/A | -1.55% |
Valuation & Earnings
This table compares Inspired Entertainment and Rackspace Technology”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Inspired Entertainment | $297.10 million | 0.76 | $64.80 million | $1.99 | 4.19 |
| Rackspace Technology | $2.74 billion | 0.15 | -$858.20 million | ($1.08) | -1.56 |
Inspired Entertainment has higher earnings, but lower revenue than Rackspace Technology. Rackspace Technology is trading at a lower price-to-earnings ratio than Inspired Entertainment, indicating that it is currently the more affordable of the two stocks.
Summary
Inspired Entertainment beats Rackspace Technology on 11 of the 15 factors compared between the two stocks.
About Inspired Entertainment
Inspired Entertainment, Inc., a gaming technology company, engages in the supply of content, platform, and other products and services to regulated lottery, betting, and gaming operators worldwide. It operates in four segments: Gaming, Virtual Sports, Interactive, and Leisure. The Gaming segment supplies gaming terminals and software to betting offices, casinos, gaming halls, and high street adult gaming centers; a portfolio of games through its digital terminals under the Centurion and Super Hot Fruits names; and traditional casino games, such as roulette, blackjack, and number games. The Virtual Sports segment designs, develops, markets, and distributes ultra-high-definition sports games, including greyhounds, tennis, motor racing, cycling, cricket, speedway, golf, and dart, and other horse racing games under the V-Play Soccer, V-Play Women's Soccer, V-Play Football, V-Play Basketball, V-Play Baseball, and V-Play NFLA names. The Interactive segment provides a range of random number generated casino content from feature-rich bonus games to European-style casino free spins and table games. The Leisure segment supplies gaming terminals and amusement machines in pubs, bingo halls, and adult gaming centers, as well as family entertainment centers, bowling centers, and other entertainment venues. Inspired Entertainment, Inc. is headquartered in New York, New York.
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.
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