Violin Memory (NYSE: VMEM) and Pure Storage (NYSE:PSTG) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitabiliy, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Profitability

This table compares Violin Memory and Pure Storage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Violin Memory -250.73% N/A -137.05%
Pure Storage -31.62% -44.04% -24.43%

Insider and Institutional Ownership

54.7% of Violin Memory shares are owned by institutional investors. Comparatively, 34.8% of Pure Storage shares are owned by institutional investors. 4.2% of Violin Memory shares are owned by company insiders. Comparatively, 46.6% of Pure Storage shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Violin Memory has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500. Comparatively, Pure Storage has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Violin Memory and Pure Storage, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Violin Memory 0 0 0 0 N/A
Pure Storage 0 7 16 0 2.70

Pure Storage has a consensus target price of $15.64, suggesting a potential upside of 15.96%. Given Pure Storage’s higher probable upside, analysts clearly believe Pure Storage is more favorable than Violin Memory.

Earnings and Valuation

This table compares Violin Memory and Pure Storage’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Violin Memory N/A N/A N/A ($3.66) -0.10
Pure Storage $770.66 million 3.65 -$160.42 million ($1.22) -11.06

Violin Memory has higher revenue, but lower earnings than Pure Storage. Pure Storage is trading at a lower price-to-earnings ratio than Violin Memory, indicating that it is currently the more affordable of the two stocks.

Summary

Pure Storage beats Violin Memory on 7 of the 10 factors compared between the two stocks.

About Violin Memory

Violin Memory, Inc. offers a class of flash-based storage solutions to bring storage performance in line with high-speed applications, servers and networks. The Company’s Flash Storage Platform is designed at each level of the system architecture to leverage the inherent capabilities of flash memory and meet the requirements of business-critical applications, virtualized environments and Big Data in enterprise data centers. The Flash Storage Platform is a vertically integrated design of software, firmware and hardware, which runs the Company’s Concerto OS 7, a single operating system with integrated continuous data protection, in-line block de-duplication and compression, stretch metro cluster and logical unit number (LUN) mirroring, as well as its suite of other Enterprise Data Services. Its products include 7300E Flash Storage Platform, 7600 Flash Storage Platform, 7700 Flash Storage Platform, 6000 Series All Flash Array and Symphony Management Suite Version 3.0.

About Pure Storage

Pure Storage, Inc. provides a data platform. The Company is focused on delivering software-defined all-flash solutions that are fast and cloud-capable for customers, enabling customers to put data to work for their businesses. Its data platform replaces storage systems designed for mechanical disk with all-flash systems optimized end-to-end for solid-state memory. Its business model replaces the forklift upgrade cycle with an Evergreen Storage model. Its primary offerings include its FlashArray and FlashBlade products, inclusive of its Purity Operating Environment (Purity OE) software, its Pure1 cloud-based software, and FlashStack, its joint converged infrastructure solution with Cisco. Its customers include large and mid-size organizations across a diverse set of industry verticals, including cloud-based software and service providers, consumer Web, education, energy, financial services, governments, healthcare, manufacturing, media, retail and telecommunications.

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