Head-To-Head Analysis: Castlight Health (CSLT) and Zendesk (ZEN)

Castlight Health (NYSE: CSLT) and Zendesk (NYSE:ZEN) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, profitability, valuation, risk and earnings.

Analyst Recommendations

This is a summary of current recommendations and price targets for Castlight Health and Zendesk, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Castlight Health 0 1 4 0 2.80
Zendesk 0 3 12 0 2.80

Castlight Health currently has a consensus price target of $5.63, suggesting a potential upside of 56.25%. Zendesk has a consensus price target of $48.60, suggesting a potential downside of 13.81%. Given Castlight Health’s higher probable upside, equities analysts clearly believe Castlight Health is more favorable than Zendesk.

Risk & Volatility

Castlight Health has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, Zendesk has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500.

Profitability

This table compares Castlight Health and Zendesk’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Castlight Health -39.39% -25.09% -17.95%
Zendesk -24.18% -30.37% -14.97%

Insider & Institutional Ownership

43.9% of Castlight Health shares are held by institutional investors. Comparatively, 94.9% of Zendesk shares are held by institutional investors. 22.6% of Castlight Health shares are held by insiders. Comparatively, 4.7% of Zendesk shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Castlight Health and Zendesk’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Castlight Health $131.43 million 3.73 -$55.57 million ($0.26) -13.85
Zendesk $430.49 million 13.70 -$110.63 million ($1.03) -54.75

Castlight Health has higher earnings, but lower revenue than Zendesk. Zendesk is trading at a lower price-to-earnings ratio than Castlight Health, indicating that it is currently the more affordable of the two stocks.

Summary

Zendesk beats Castlight Health on 7 of the 13 factors compared between the two stocks.

Castlight Health Company Profile

Castlight Health, Inc. provides a software-as-a-service platform used for health benefits navigation for employees in the United States. Its platform matches employees to the resources their employers make available to them; managing a condition; and assists them to manage their benefits. The company also offers communication and testing, implementation, and user customer support services. It serves customers in a range of industries, including education, manufacturing, retail, technology, and government. The company was formerly known as Ventana Health Services and changed its name to Castlight Health, Inc. in April 2010. Castlight Health, Inc. was founded in 2008 and is headquartered in San Francisco, California.

Zendesk Company Profile

Zendesk, Inc., a software development company, provides SaaS products for organizations. Its flagship product is Zendesk Support, a system for tracking, prioritizing, and solving customer support tickets across various channels. The company also offers Zendesk Chat, a live chat software to connect with customers on Websites, in applications, and on mobile devices; Zendesk Talk, a cloud-based call center software; Zendesk Guide, a knowledge base that for customer self-service and support agent productivity; Zendesk Message, a customer messaging software; and Zendesk Explore that makes customer data accessible across an organization. In addition, it operates a developer platform that allows organizations to extend the functionality of its family of products, integrate into internal and third-party systems, and customize the experience for their employees and customers. It has operations in the United States, Europe, the Middle East, Africa, and internationally. Zendesk, Inc. was founded in 2007 and is headquartered in San Francisco, California.

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