Contrasting Proofpoint (NASDAQ:PFPT) and Tucows (NASDAQ:TCX)

Proofpoint (NASDAQ:PFPT) and Tucows (NASDAQ:TCX) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Profitability

This table compares Proofpoint and Tucows’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Proofpoint -17.35% -7.09% -1.81%
Tucows 4.51% 16.98% 3.64%

Insider & Institutional Ownership

94.6% of Proofpoint shares are owned by institutional investors. Comparatively, 56.8% of Tucows shares are owned by institutional investors. 2.9% of Proofpoint shares are owned by company insiders. Comparatively, 13.5% of Tucows shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Proofpoint has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Tucows has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Proofpoint and Tucows, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Proofpoint 0 4 14 1 2.84
Tucows 0 0 0 0 N/A

Proofpoint currently has a consensus price target of $143.78, suggesting a potential upside of 24.30%. Given Proofpoint’s higher probable upside, equities research analysts plainly believe Proofpoint is more favorable than Tucows.

Valuation & Earnings

This table compares Proofpoint and Tucows’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Proofpoint $888.19 million 7.46 -$130.26 million ($0.72) -160.65
Tucows $337.14 million 1.90 $15.40 million N/A N/A

Tucows has lower revenue, but higher earnings than Proofpoint.

Summary

Proofpoint beats Tucows on 7 of the 13 factors compared between the two stocks.

Proofpoint Company Profile

Proofpoint, Inc. operates as a security-as-a-service provider that enables large and mid-sized organizations to defend, protect, archive, and govern their sensitive data worldwide. It offers protection against advanced and targeted threats, including malicious attachments, polymorphic threats, zero-day exploits, user-transparent ‘drive-by' downloads, malicious Web links, hybrid threats, malware free attacks, and other penetration tactics. The company also provides integrated email security, advanced threat, information protection and archiving, and digital risk protection product services. In addition, it offers solutions that enable secure business-to-business and business-to-consumer communications; email encryption services that encrypt sensitive emails and deliver them to PC or mobile device; file-transfer solutions for end-users to share various forms of documents and other content; security optimized cloud architecture solutions; and extensible security-as-a-service platform. The company serves aerospace and defense, education, financial services, government, healthcare, manufacturing, and retail sectors. Proofpoint, Inc. was founded in 2002 and is headquartered in Sunnyvale, California.

Tucows Company Profile

Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in Canada, the United States, and Germany. It operates in two segments, Network Access Services and Domain Services. The Network Access Services segment engages in the provision of mobile services under the Ting Mobile name, including the sale of retail telephony services, mobile phone hardware, and related accessories. It also provides roaming service to international travelers under the Zipsim and Always Online Wireless names; fixed high-speed Internet access services to consumer and business customers; Internet hosting and network consulting services; and billing, provisioning, and customer care software solutions to Internet Service Providers (ISPs) through its Platypus billing software. This segment distributes its products and services through the Ting Website, as well as through third-party retail stores and online retailers. The Domain Services segment offers wholesale and retail domain name registration services, value added services, and portfolio services under the OpenSRS, eNom, and Hover names. Its value-added services include hosted email, which provides email delivery and Webmail access to various mailboxes; Internet security services; and Internet hosting, WHOIS privacy, publishing tools, and other value-added services for end-users. In addition, this segment sells retail domain name registration and email services to individuals and small businesses; and leases and sells a portfolio of domain names. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.

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