Comparing VMware (VMW) and F5 Networks (FFIV)

VMware (NYSE: VMW) and F5 Networks (NASDAQ:FFIV) are both technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Volatility and Risk

VMware has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, F5 Networks has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Valuation & Earnings

This table compares VMware and F5 Networks’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
VMware $7.09 billion 6.62 $1.19 billion $3.50 33.26
F5 Networks $2.09 billion 4.03 $420.76 million $6.49 20.98

VMware has higher revenue and earnings than F5 Networks. F5 Networks is trading at a lower price-to-earnings ratio than VMware, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations for VMware and F5 Networks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
VMware 1 8 19 0 2.64
F5 Networks 1 15 6 0 2.23

VMware currently has a consensus target price of $130.71, indicating a potential upside of 12.29%. F5 Networks has a consensus target price of $139.00, indicating a potential upside of 2.07%. Given VMware’s stronger consensus rating and higher possible upside, equities research analysts plainly believe VMware is more favorable than F5 Networks.

Institutional & Insider Ownership

22.5% of VMware shares are held by institutional investors. Comparatively, 95.5% of F5 Networks shares are held by institutional investors. 34.4% of VMware shares are held by insiders. Comparatively, 0.3% of F5 Networks shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares VMware and F5 Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
VMware 18.97% 18.57% 8.81%
F5 Networks 19.79% 35.98% 17.83%

Summary

VMware beats F5 Networks on 8 of the 14 factors compared between the two stocks.

VMware Company Profile

VMware, Inc. is an information technology (IT) company. The Company is engaged in development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware. The Company offers various products, which allow organizations to manage IT resources across private clouds and multi-cloud, multi-device environments by leveraging synergies across three product categories: Software-Defined Data Center (SDDC), Hybrid Cloud Computing and End-User Computing (EUC). The SDDC is designed to transform and modernize the data center into an on-demand service that addresses application requirements by abstracting, pooling and automating the services that are required from the underlying hardware. The Company provides many storage and availability products to offer data storage and protection options to all applications running on the vSphere platform.

F5 Networks Company Profile

F5 Networks, Inc. is a developer and provider of software defined application services. The Company is engaged in the development, marketing and sale of application delivery networking products that optimize the security, performance and availability of network applications, servers and storage systems. The Company’s geographical segments include the Americas (primarily the United States); Europe, the Middle East, and Africa (EMEA); Japan, and the Asia Pacific region (APAC). The Company’s Traffic Management Operating System (TMOS) based offerings include software products for local and global traffic management, network and application security, access management, Web acceleration and various network and application services. These products are available as modules that can run individually or as part of an integrated solution on the Company’s purpose-built BIG-IP appliances and VIPRION chassis-based hardware, or as software-only Virtual Editions.

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