Box (NYSE: BOX) and Zendesk (NYSE:ZEN) are both mid-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.

Insider and Institutional Ownership

58.1% of Box shares are held by institutional investors. Comparatively, 96.2% of Zendesk shares are held by institutional investors. 20.6% of Box shares are held by insiders. Comparatively, 5.3% of Zendesk shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Box and Zendesk, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Box 0 2 12 0 2.86
Zendesk 1 1 12 0 2.79

Box presently has a consensus target price of $23.73, suggesting a potential upside of 10.21%. Zendesk has a consensus target price of $32.42, suggesting a potential upside of 7.09%. Given Box’s stronger consensus rating and higher probable upside, equities analysts clearly believe Box is more favorable than Zendesk.

Valuation and Earnings

This table compares Box and Zendesk’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Box $452.90 million 6.36 -$117.70 million ($1.18) -18.25
Zendesk $363.62 million 8.37 -$86.63 million ($1.10) -27.52

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

Volatility and Risk

Box has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, Zendesk has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500.

Profitability

This table compares Box and Zendesk’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Box -34.11% -232.81% -32.96%
Zendesk -29.34% -32.10% -20.12%

Summary

Zendesk beats Box on 8 of the 12 factors compared between the two stocks.

Box Company Profile

Box, Inc. provides an enterprise content management platform that enables organizations of all sizes to manage enterprise content while allowing access and sharing of this content from anywhere, on any device. With the Company’s Software-as-a-Service (SaaS) cloud-based platform, users can collaborate on content both internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security and compliance features to comply with internal policies and industry regulations. Its platform enables people to view, share and collaborate on content, across various file formats and media types. The software integrates with enterprise business applications, and is compatible with various application environments, operating systems and devices, ensuring that workers have access to their business content. It offers individuals a free basic version of the Box platform that allows them to experience its solution.

Zendesk Company Profile

Zendesk, Inc. (Zendesk) is a software development company. The Zendesk family of products is built to work together to help organizations understand and manage customer relationships. All Zendesk products share a common interface and are being developed to support a shared services infrastructure and common customer data platform. Zendesk’s products are developed using agile software techniques, and are designed to incorporate and innovate on customer feedback obtained through beta and Early Access Programs (EAPs). Its family of products includes Zendesk Support, Zendesk Chat, Zendesk Talk, Zendesk Help Center, Zendesk Message, Zendesk Explore and Zendesk Connect. Zendesk’s developer platform allows organizations to extend the functionality of its family of products and customize the experience for their employees and customers. Key components of Zendesk’s developer platform include Zendesk Embeddables, Zendesk application program interfaces (APIs) and Zendesk Applications.

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