SolarWinds (NYSE: SWI) and Paycom Software (NYSE:PAYC) are both mid-cap technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitabiliy, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Earnings & Valuation

This table compares SolarWinds and Paycom Software’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SolarWinds N/A N/A N/A N/A N/A
Paycom Software $358.52 million 11.46 $79.34 million $0.87 81.59

Paycom Software has higher revenue and earnings than SolarWinds.

Profitability

This table compares SolarWinds and Paycom Software’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SolarWinds 20.52% 19.24% 12.70%
Paycom Software 14.19% 33.01% 3.94%

Insider & Institutional Ownership

90.5% of Paycom Software shares are owned by institutional investors. 17.9% of Paycom Software shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for SolarWinds and Paycom Software, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SolarWinds 0 0 0 0 N/A
Paycom Software 0 3 8 0 2.73

Paycom Software has a consensus price target of $65.91, suggesting a potential downside of 7.14%. Given Paycom Software’s higher possible upside, analysts plainly believe Paycom Software is more favorable than SolarWinds.

Summary

Paycom Software beats SolarWinds on 7 of the 9 factors compared between the two stocks.

About SolarWinds

SolarWinds, Inc. (SolarWinds) is a holding company. The Company designs, develops, markets, sells and supports enterprise-class information technology (IT), infrastructure management software to IT and DevOps professionals in organizations of all sizes. Its products categories include network management, which is used to monitor and manage the performance of network infrastructure; systems management, which is used to monitor and manage the performance of applications, physical and virtual servers, storage and databases; MSP, which is used by managed service providers to monitor and manage the IT infrastructure of their end clients, SMBs, and cloud, its cloud-based products, which are used to monitor and manage applications and application infrastructure. Its customers include small- and mid-size businesses, enterprises, MSPs, and local, state and federal Government entities.

About Paycom Software

Paycom Software, Inc. is a provider of a cloud-based human capital management (HCM) software solution delivered as Software-as-a-Service (SaaS). The Company provides functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. The Company’s applications streamline client processes and provide clients and their employees with the ability to directly access and manage administrative processes, including applications that identify candidates, on-board employees, manage time and labor, administer payroll deductions and benefits, manage performance, terminate employees and administer post-termination health benefits, such as COBRA. The Company’s solution allows clients to analyze employee information to make business decisions. The Company’s HCM solution offers a range of applications, including talent acquisition, time and labor management, payroll, talent management and human resources (HR) management.

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