Contrasting Radware (RDWR) and Digimarc (NASDAQ:DMRC)

Digimarc (NASDAQ: DMRC) and Radware (NASDAQ:RDWR) are both small-cap industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Insider & Institutional Ownership

57.5% of Digimarc shares are held by institutional investors. Comparatively, 61.4% of Radware shares are held by institutional investors. 7.5% of Digimarc shares are held by company insiders. Comparatively, 21.6% of Radware shares are held 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.

Risk & Volatility

Digimarc has a beta of -1.35, suggesting that its stock price is 235% less volatile than the S&P 500. Comparatively, Radware has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Profitability

This table compares Digimarc and Radware’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digimarc -90.69% -30.98% -29.02%
Radware -5.74% -2.27% -1.55%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Digimarc and Radware, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digimarc 0 1 3 0 2.75
Radware 0 0 6 0 3.00

Digimarc presently has a consensus price target of $45.33, suggesting a potential upside of 53.41%. Radware has a consensus price target of $21.17, suggesting a potential upside of 4.48%. Given Digimarc’s higher possible upside, research analysts plainly believe Digimarc is more favorable than Radware.

Earnings and Valuation

This table compares Digimarc and Radware’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digimarc $21.79 million 15.36 -$21.67 million ($2.25) -13.13
Radware $196.59 million 4.48 -$8.65 million ($0.26) -77.92

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

Summary

Radware beats Digimarc on 11 of the 13 factors compared between the two stocks.

About Digimarc

Digimarc Corporation (Digimarc) enables governments and enterprises to give digital identities to media and objects that computers can sense and recognize. The Company’s Digimarc Discover, Digimarc Barcode and Intuitive Computing Platform are designed to optimize the identification of consumer brand impressions, facilitating mobile-centric shopping. The Company operates through media management solutions segment. The Company’s platform includes means to embed Digimarc Barcodes, invisible and inaudible barcode-like information that is recognizable by smartphones, industrial scanners, and other computer interfaces into various forms of media content, including consumer product packaging. Its Digimarc Barcodes has a range of applications, including facilitating scanning of products at retail checkout, as well as engagement with smartphone-equipped consumers. The Digimarc Barcode allows automatic identification of media without visible computer codes, such as traditional barcodes.

About Radware

Radware Ltd. is a provider of cyber security and application delivery solutions. The Company’s solutions incorporate Distributed Denial of Service protection, Web application firewall (WAF) and Application Delivery Controllers (ADC) technologies to enable its customers to provide cyber-attack mitigation solutions for a range of applications. The Company’s products and activities are focused on protecting against cyber-attacks and ensuring optimal application service level for enterprises’ and carriers’ data centers. Its solutions include application and network security, and application delivery. Its application and network Security products include DefensePro Attack Mitigation Device, AppWall Web Application Firewall, DefenseFlow Cyber Command and Control application, and DefensePipe Cloud Scrubbing Service. Its application delivery products include Alteon NG, LinkProof NG and FastView. Its management solutions include APSolute Vision, application performance monitoring and vDirect.

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