Red Hat (NYSE: RHT) and SciQuest (NASDAQ:SQI) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, dividends, institutional ownership, profitability, valuation, analyst recommendations and risk.

Profitability

This table compares Red Hat and SciQuest’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Hat 11.49% 25.27% 7.43%
SciQuest 3.93% 2.23% 1.59%

Earnings and Valuation

This table compares Red Hat and SciQuest’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Red Hat $2.41 billion 8.89 $253.70 million $1.66 72.48
SciQuest N/A N/A N/A $0.11 161.36

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Red Hat and SciQuest, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Hat 1 8 22 0 2.68
SciQuest 0 0 0 0 N/A

Red Hat presently has a consensus price target of $112.83, indicating a potential downside of 6.65%. Given Red Hat’s higher probable upside, research analysts plainly believe Red Hat is more favorable than SciQuest.

Risk and Volatility

Red Hat has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500. Comparatively, SciQuest has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.

Insider and Institutional Ownership

93.9% of Red Hat shares are owned by institutional investors. 0.7% of Red Hat shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Red Hat beats SciQuest on 9 of the 10 factors compared between the two stocks.

About Red Hat

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

About SciQuest

SciQuest, Inc. is a United States-based public provider of spend management solutions. The Company’s offers a range of solutions, such as Spend Director, Spend Radar, Sourcing Director, Advanced Sourcing Optimizer, Total Contract Manager, Total Supplier Manager, Enterprise Reagent Manager, Accounts Payable Director, Supplier Network and Portfolio Savings Manager. Its Spend Director is an e-procurement software, which allows users’ to integrate and automate processes, suppliers, compliance and workflows. Its Portfolio Savings Manager is a cloud-based savings management software that integrates project forecasting, initiative approval workflows and real-time savings. Its chemical inventory management software, Enterprise Reagent Manager (ERM), allows scientific staff in the organization to find, source and track commercial and proprietary chemicals, reagents and lab supplies. Its Total Contract Manager is a Contract Lifecycle Management solution that offers real-time updates.

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