Head to Head Analysis: Rackspace Hosting (RAX) & Salesforce.com (CRM)
Rackspace Hosting (NYSE: RAX) and Salesforce.com (NYSE:CRM) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, dividends, risk, valuation, profitability, analyst recommendations and institutional ownership.
Volatility and Risk
Rackspace Hosting has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500. Comparatively, Salesforce.com has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.
Valuation & Earnings
This table compares Rackspace Hosting and Salesforce.com’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Salesforce.com||$8.86 billion||7.30||$448.89 million||$0.20||453.80|
Salesforce.com has higher revenue and earnings than Rackspace Hosting. Rackspace Hosting is trading at a lower price-to-earnings ratio than Salesforce.com, indicating that it is currently the more affordable of the two stocks.
This table compares Rackspace Hosting and Salesforce.com’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider and Institutional Ownership
78.0% of Rackspace Hosting shares are held by institutional investors. Comparatively, 86.3% of Salesforce.com shares are held by institutional investors. 15.5% of Rackspace Hosting shares are held by company insiders. Comparatively, 6.7% of Salesforce.com shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a summary of current ratings and target prices for Rackspace Hosting and Salesforce.com, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Rackspace Hosting presently has a consensus target price of $32.00, indicating a potential upside of 0.03%. Salesforce.com has a consensus target price of $97.13, indicating a potential upside of 7.02%. Given Salesforce.com’s stronger consensus rating and higher probable upside, analysts clearly believe Salesforce.com is more favorable than Rackspace Hosting.
Rackspace Hosting beats Salesforce.com on 6 of the 11 factors compared between the two stocks.
Rackspace Hosting Company Profile
Rackspace Hosting, Inc. (Rackspace) operates in the managed cloud segment of the business information technology (IT) market. The Company offers a portfolio of integrated IT solutions for common business needs. The Company offers services for certain applications, including e-commerce and Web content management sites, business-productivity applications, such as e-mail and collaboration, and data stores. The Company offers private, public and hybrid clouds in its approximately 10 data centers located on over four continents, in Microsoft Azure and Amazon Web Services data centers, as well as in customer-owned data centers. Its services include dedicated customer care and technical support, such as operating system patching, application monitoring, network and firewall configurations, and identity management. The Company has operations located in multiple cities across the United States, as well as in London, Amsterdam, Zurich, Hong Kong, Sydney and Mexico City.
Salesforce.com Company Profile
Salesforce.com, inc. is a provider of enterprise software, delivered through the cloud, with a focus on customer relationship management (CRM). The Company focuses on cloud, mobile, social, Internet of Things (IoT) and artificial intelligence technologies. The Company’s service offerings are configured and integrated with other platforms and enterprise applications. The Company delivers its service offerings via Internet browsers and on mobile devices. Its Customer Success Platform is a portfolio of service offerings providing sales force automation, customer service and support, marketing automation, digital commerce, community management, analytics, application development, IoT integration, collaborative productivity tools and its professional cloud services. Its cloud service offerings include Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud, Community Cloud, Analytics Cloud, Salesforce Quip and Salesforce Platform.
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