Qualys (NASDAQ: QLYS) and GTT Communications (NYSE:GTT) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitabiliy, earnings, analyst recommendations and risk.

Analyst Ratings

This is a breakdown of current recommendations for Qualys and GTT Communications, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Qualys 0 9 6 0 2.40
GTT Communications 0 0 6 0 3.00

Qualys presently has a consensus target price of $43.50, indicating a potential upside of 4.07%. GTT Communications has a consensus target price of $35.50, indicating a potential upside of 18.14%. Given GTT Communications’ stronger consensus rating and higher probable upside, analysts plainly believe GTT Communications is more favorable than Qualys.

Profitability

This table compares Qualys and GTT Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Qualys 17.76% 14.57% 9.20%
GTT Communications -2.15% 4.57% 0.72%

Volatility and Risk

Qualys has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, GTT Communications has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.

Earnings & Valuation

This table compares Qualys and GTT Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Qualys $204.80 million 7.56 $48.86 million $0.93 44.95
GTT Communications $579.62 million 2.14 $128.11 million ($0.30) -100.16

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

Insider & Institutional Ownership

74.3% of Qualys shares are owned by institutional investors. Comparatively, 56.5% of GTT Communications shares are owned by institutional investors. 30.2% of Qualys shares are owned by insiders. Comparatively, 25.7% of GTT Communications shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Qualys beats GTT Communications on 7 of the 13 factors compared between the two stocks.

About Qualys

Qualys, Inc. is a provider of cloud-based security and compliance solutions. The Company’s solutions enable organizations to identify security risks to their information technology (IT) infrastructures, help protect their IT systems and applications from cyber-attacks. Its suite of security and compliance solutions delivered on its Qualys Cloud Platform enables its customers to identify their IT assets, collect and analyze IT security data, discover and prioritize vulnerabilities, recommend remediation actions and verify the implementation of such actions. Its Qualys Cloud Platform consists of a suite of IT security and compliance solutions. The Qualys Cloud Suite includes solutions, such as Vulnerability Management, Continuous Monitoring, Cloud Agent, AssetView, ThreatPROTECT, Policy Compliance, Payment Card Industry Compliance, Security Assessment Questionnaire, Web Application Scanning and Web Application Firewall. It provides its solutions through a software-as-a-service model.

About GTT Communications

GTT Communications, Inc. provides cloud networking services to a range of clients. The Company offers a portfolio of global communications services, wide area network (WAN) services; Internet services; managed network and security services, and voice and unified communication services. It provides Layer 2 (Ethernet) and Layer 3 (multiprotocol label switching (MPLS)) WAN solutions for multinational clients. It offers customers with high-bandwidth global Internet connectivity and Internet protocol (IP) transit with availability and packet delivery. The Company offers managed network services, including managed equipment, managed security services and managed remote access. Its Session Initiation Protocol (SIP) Trunking service is an enterprise-built unified communications offering that integrates voice, video and chat onto a single IP connection. As of December 31, 2016, it had provided services to multinational enterprises, carriers and government customers in over 100 countries.

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