Comparing Glu Mobile (GLUU) and Virtusa (VRTU)

Glu Mobile (NASDAQ: GLUU) and Virtusa (NASDAQ:VRTU) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitability, analyst recommendations, dividends, valuation and risk.

Profitability

This table compares Glu Mobile and Virtusa’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Glu Mobile -26.33% -34.72% -19.81%
Virtusa 0.12% 5.94% 3.22%

Analyst Recommendations

This is a summary of recent ratings for Glu Mobile and Virtusa, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Glu Mobile 0 2 5 0 2.71
Virtusa 0 2 4 1 2.86

Glu Mobile presently has a consensus target price of $5.32, indicating a potential downside of 17.75%. Virtusa has a consensus target price of $58.71, indicating a potential upside of 22.63%. Given Virtusa’s stronger consensus rating and higher possible upside, analysts plainly believe Virtusa is more favorable than Glu Mobile.

Earnings and Valuation

This table compares Glu Mobile and Virtusa’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Glu Mobile $286.83 million 3.15 -$97.57 million ($0.51) -12.69
Virtusa $1.02 billion 1.39 $1.25 million $0.89 53.80

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

Institutional & Insider Ownership

45.9% of Glu Mobile shares are owned by institutional investors. Comparatively, 85.6% of Virtusa shares are owned by institutional investors. 5.8% of Glu Mobile shares are owned by company insiders. Comparatively, 6.0% of Virtusa shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Glu Mobile has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500. Comparatively, Virtusa has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500.

Summary

Virtusa beats Glu Mobile on 12 of the 15 factors compared between the two stocks.

About Glu Mobile

Glu Mobile Inc. develops, publishes, and markets a portfolio of free-to-play mobile games for the users of smartphones and tablet devices. The company publishes titles in four genres, including home décor, sports and action, fashion and celebrity, and time management. It creates games based on its own brands, including Contract Killer, Cooking Dash, Covet Fashion, Deer Hunter, Design Home, and QuizUp. The company also creates games based on third-party licensed brands, such as Restaurant Dash with Gordon Ramsay and Kim Kardashian; and Hollywood, MLB Tap Sports Baseball, and Racing Rivals. It markets, sells, and distributes its games primarily through direct-to-consumer digital storefronts worldwide. The company was formerly known as Sorrent, Inc. and changed its name to Glu Mobile Inc. in May 2005. Glu Mobile Inc. was incorporated in 2001 and is headquartered in San Francisco, California.

About Virtusa

Virtusa Corporation provides digital engineering and information technology (IT) outsourcing services worldwide. The company offers business and IT consulting services, including advisory/target operating model, business process re-engineering/business management, transformational solution consulting, and business/technology alignment analysis; omni-channel digital strategy, experience design accelerated solution design, and employee engagement; and application portfolio rationalization, SDLC transformation, and BA competency transformation services. It also provides technology implementation services, such as application development, software product engineering, CRM and SAP implementation, content management, enterprise mobility, cloud computing, and social media solutions; systems consolidation and rationalization, technology migration and porting, and legacy application Web-enablement; data management, business intelligence, reporting and decision support, master data management, data integration, and big data analytics; and software quality assurance and managed testing services. In addition, the company offers application outsourcing services comprising application maintenance and support, applications enhancement, and cloud-environment management and support; managed infrastructure, and remote application monitoring and support services; and IT efficiency improvement services. Further, it offers digital engineering and operational excellence services-based, and transformational solutions. The company provides its services to communications and technology; banking, financial services, and insurance; and media and information industries. The company was formerly known as eRunway, Inc. and changed its name to Virtusa Corporation in April 2002. Virtusa Corporation was founded in 1996 and is headquartered in Southborough, Massachusetts.

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