Ooma (NYSE:OOMA) and Pegasystems (NYSE:PEGA) Critical Comparison

Ooma (NYSE:OOMA) and Pegasystems (NASDAQ:PEGA) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, earnings, analyst recommendations, valuation and risk.

Valuation and Earnings

This table compares Ooma and Pegasystems’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ooma $129.23 million 1.87 -$14.57 million ($0.69) -16.61
Pegasystems $891.58 million 6.56 $10.61 million N/A N/A

Pegasystems has higher revenue and earnings than Ooma.

Profitability

This table compares Ooma and Pegasystems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ooma -12.05% -46.20% -19.32%
Pegasystems -5.95% -9.39% -5.84%

Risk & Volatility

Ooma has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, Pegasystems has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Insider & Institutional Ownership

76.1% of Ooma shares are held by institutional investors. Comparatively, 46.7% of Pegasystems shares are held by institutional investors. 10.2% of Ooma shares are held by insiders. Comparatively, 52.4% of Pegasystems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Pegasystems pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Ooma does not pay a dividend.

Analyst Recommendations

This is a summary of recent recommendations for Ooma and Pegasystems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ooma 2 1 4 0 2.29
Pegasystems 0 0 4 0 3.00

Ooma presently has a consensus target price of $18.38, indicating a potential upside of 60.34%. Pegasystems has a consensus target price of $83.50, indicating a potential upside of 12.94%. Given Ooma’s higher possible upside, research analysts clearly believe Ooma is more favorable than Pegasystems.

Summary

Pegasystems beats Ooma on 10 of the 12 factors compared between the two stocks.

Ooma Company Profile

Ooma, Inc. creates connected experiences for businesses and consumers in the United States, Canada, and internationally. The company's smart cloud-based SaaS platform serves as a communications hub, which offers cloud-based communications solutions, smart security, and other connected services. Its business and residential solutions deliver PureVoice high-definition voice quality, advanced functionality, and integration with mobile devices; and platform helps to create smart workplace and homes by offering communications, monitoring, security, automation, productivity, and networking infrastructure applications. The company's products and services include Ooma Office, a multi-user communications system that provides everything needed to manage communications in and out of the office for small businesses; Ooma Office Mobile HD app to make, receive, and transfer phone calls; and Ooma Enterprise, an unified-communications-as-a-service. It also provides Ooma Telo, a home communications solution designed to serve as the primary phone line in the home; Ooma Telo Air, a solution that connects to the Internet wirelessly using the home's Wi-Fi network and can be paired with mobile phones to answer incoming mobile calls from any phone in the home; and Ooma HD3 cordless handset. In addition, the company offers Ooma Premier Service, a suite of advanced calling features to enhance the capabilities of Ooma Telo; and Ooma Mobile HD app that allows users to make and receive phone calls and access Ooma features and settings with iOS or Android device over a Wi-Fi or cellular data connection. Further, it provides Ooma Smart Security, a security and monitoring platform; Ooma Smart Cam, an indoor/outdoor high-definition video security camera; and Talkatone mobile app. The company offers its products through direct sales, retailers, distributors, and resellers, as well as online. Ooma, Inc. was incorporated in 2003 and is headquartered in Sunnyvale, California.

Pegasystems Company Profile

Pegasystems Inc. develops, markets, licenses, and supports enterprise software applications in the United States, India, and internationally. It provides Pega Platform, an application development product for clients; and Pega Infinity, a software platform that unifies customer engagement and digital process automation. The company offers customer engagement applications, including Pega Marketing that enable enterprises to enhance customer acquisition and experiences across inbound, outbound, and paid media channels; Pega Sales Automation to automate and manage the sales process; and Pega Customer Service to anticipate customer needs, connect customers to people and systems, and automate customer interactions to evolve the customer service experience, as well as to allow enterprises to deliver interactions across channels and enhance employee productivity. It also provides digital process automation products for businesses with capabilities to automate industry-specific business processes. In addition, the company offers Pega Cloud that allows clients to develop, test, and deploy applications and the Pega Platform using an Internet-based infrastructure; and guidance and implementation, technical support, and instructor-led and online training services. It primarily markets its software and services to financial services, healthcare, manufacturing and high tech, communications and media, insurance, government, consumer services, and life sciences markets through a direct sales force, as well as partnerships with technology providers and application developers. Pegasystems Inc. was founded in 1983 and is headquartered in Cambridge, Massachusetts.

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