SendGrid (SEND) and Benefitfocus (BNFT) Critical Analysis

SendGrid (NYSE: SEND) and Benefitfocus (NASDAQ:BNFT) are both small-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, risk, earnings, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for SendGrid and Benefitfocus, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SendGrid 0 1 5 0 2.83
Benefitfocus 0 3 5 0 2.63

SendGrid currently has a consensus price target of $25.33, suggesting a potential upside of 24.49%. Benefitfocus has a consensus price target of $35.00, suggesting a potential upside of 29.15%. Given Benefitfocus’ higher probable upside, analysts clearly believe Benefitfocus is more favorable than SendGrid.

Profitability

This table compares SendGrid and Benefitfocus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SendGrid N/A N/A N/A
Benefitfocus -10.28% N/A -14.48%

Insider & Institutional Ownership

85.8% of Benefitfocus shares are owned by institutional investors. 40.1% of Benefitfocus shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares SendGrid and Benefitfocus’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SendGrid N/A N/A N/A ($0.11) -185.00
Benefitfocus $233.34 million 3.63 -$40.05 million ($0.85) -31.88

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

SendGrid Company Profile

SendGrid, Inc. provides a digital communication platform. The Company’s platform enables businesses to engage with their customers through email. It offers three services: Email application programming interface (API), marketing campaigns and Expert services. Its email API service allows developers to use its API in their preferred development framework to leverage its platform to add email functionality to their applications. Its marketing campaigns service allows marketers to upload and manage customer contact lists, create and test email templates, and then execute and analyze multi-faceted email campaigns. Its Expert services help businesses optimize their email delivery. The features of email API include integrations, documentations, internet protocol (IP) management, deliverability, reporting and analytics, mobile support and security. Its marketing campaign services include segmentation and contact management tools, A/B testing, email template editor and analytics and reporting.

Benefitfocus Company Profile

Benefitfocus, Inc. (Benefitfocus) is a provider of cloud-based benefits management platform for consumers, employers, insurance carriers and brokers. The Benefitfocus Platform allows how organizations and individuals shop for, enroll in, manage and exchange benefits. The Company operates through two business segments: Employer, which derives its revenue from customers that use the Company’s services for the provision of benefits to their employees, and administrators acting on behalf of employers, Carrier, which derives its revenue from insurance companies that provide coverage at their own risk. Its solutions support benefits plans, including healthcare, dental, life and disability insurance, and voluntary benefits plans, such as critical illness, supplemental income and wellness programs. It provides a multi-tenant cloud-based benefits management platform to the employer and carrier markets.

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