Synopsys (NASDAQ: SNPS) and Evolving Systems (NASDAQ:EVOL) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, dividends, valuation and analyst recommendations.

Earnings & Valuation

This table compares Synopsys and Evolving Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Synopsys $2.66 billion 4.54 $534.59 million $2.12 37.93
Evolving Systems $24.32 million 2.47 $7.79 million $0.36 13.33

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Synopsys and Evolving Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Synopsys 0 2 6 0 2.75
Evolving Systems 0 0 0 0 N/A

Synopsys currently has a consensus price target of $83.00, indicating a potential upside of 3.22%. Given Synopsys’ higher possible upside, analysts clearly believe Synopsys is more favorable than Evolving Systems.

Profitability

This table compares Synopsys and Evolving Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Synopsys 12.37% 11.60% 7.14%
Evolving Systems 17.69% 15.73% 10.69%

Institutional and Insider Ownership

88.9% of Synopsys shares are held by institutional investors. Comparatively, 31.5% of Evolving Systems shares are held by institutional investors. 1.8% of Synopsys shares are held by company insiders. Comparatively, 10.2% of Evolving Systems shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Synopsys has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500. Comparatively, Evolving Systems has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Summary

Synopsys beats Evolving Systems on 9 of the 13 factors compared between the two stocks.

About Synopsys

Synopsys, Inc. provides software, intellectual property (IP) and services. The Company supplies the electronic design automation (EDA) software that engineers use to design and test integrated circuits, also known as chips. It also offers IP products, which are pre-designed circuits that engineers use as components of larger chip designs rather than designing those circuits themselves. It provides software and hardware used to develop the electronic systems that incorporate chips and the software that runs on them. It provides technical services to support its solutions and help its customers develop chips and electronic systems. It is also a provider of software tools that developers use to develop software code in a range of industries, including electronics, financial services, energy, and industrials. It offers products and services in four categories: core EDA; IP, Systems and Software Integrity; Manufacturing Solutions, and Professional Services and Other.

About Evolving Systems

Evolving Systems, Inc. is a provider of software solutions for service enablement, on-device activation and management of services for connected devices for network operators. The Company operates in two segments: license fees and services revenue, and customer support revenue. Its service activation solution, Tertio is used to activate voice, video and data services for wireless, wireline and cable network operators. Its Subscriber Identity Module (SIM) card activation solution, Dynamic SIM Allocation is used to allocate and assign resources to Mobile Network Operators devices that rely on SIM cards. Its Mobile Data Enablement solution provides a data consumption and policy management solution for wireless carriers and Mobile Virtual Network Operators that monitor the usage and consumption of data services. Its Total Number Management product is an automated database solution that enables operators to manage their telephone numbers, as well as other communication identifiers.

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