The Ultimate Software Group (NASDAQ: ULTI) and Gridsum (NASDAQ:GSUM) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Volatility & Risk

The Ultimate Software Group has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, Gridsum has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Insider & Institutional Ownership

35.7% of Gridsum shares are owned by institutional investors. 4.9% of The Ultimate Software Group shares are owned by 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 Ratings

This is a summary of recent ratings and price targets for The Ultimate Software Group and Gridsum, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Ultimate Software Group 1 4 16 0 2.71
Gridsum 0 0 0 0 N/A

The Ultimate Software Group currently has a consensus target price of $231.58, suggesting a potential upside of 11.31%. Given The Ultimate Software Group’s higher possible upside, equities research analysts plainly believe The Ultimate Software Group is more favorable than Gridsum.

Profitability

This table compares The Ultimate Software Group and Gridsum’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Ultimate Software Group 3.31% 6.84% 2.45%
Gridsum -27.91% -19.63% -11.15%

Earnings & Valuation

This table compares The Ultimate Software Group and Gridsum’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Ultimate Software Group $781.29 million 7.96 $30.25 million $0.97 214.48
Gridsum $57.65 million 3.60 -$9.74 million ($0.72) -11.46

The Ultimate Software Group has higher revenue and earnings than Gridsum. Gridsum is trading at a lower price-to-earnings ratio than The Ultimate Software Group, indicating that it is currently the more affordable of the two stocks.

Summary

The Ultimate Software Group beats Gridsum on 11 of the 12 factors compared between the two stocks.

About The Ultimate Software Group

The Ultimate Software Group, Inc. (Ultimate) is a cloud provider of people management solutions, referred to as human capital management (HCM). The Company’s UltiPro product suite (UltiPro) is an engaging solution that has human resources (HR), payroll and benefits management. As of December 31, 2016, UltiPro included global people management, available in 14 languages with more than 35 country-specific localizations. The solution is delivered through software-as-a-service (SaaS) to organizations based in the United States and Canada, including those with global workforces. The UltiPro solution includes feature sets for talent acquisition and onboarding, HR management and compliance, benefits management and online enrollment, payroll, performance management, compensation management with salary planning, budgeting, and development of incentive plans, succession management, reporting and analytical decision-making and predictive tools, and time and attendance.

About Gridsum

Gridsum Holding Inc. is a holding company. The Company provides data analysis software for multinational and domestic enterprises, and government agencies in China. The Company’s technology, the Gridsum Big Data Platform performs multi-dimensional correlation analysis and analyzes real-time events. The Company offers various types of solutions and technologies. The Company’s software products are designed for a range of commercial and governmental applications. The Company’s products focus on digital marketing analytics and automation solutions. The Company offers Web analytics solutions based on data warehouse technology to build solutions on a distributed data warehouse architecture, using the open-source Hadoop framework. The Company delivers its solutions as cloud-based software-as-a-service (SaaS) offerings that manage information technology (IT) support costs by outsourcing hardware and software maintenance and support.

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