Analyzing Solera (SLH) & RealNetworks (RNWK)

RealNetworks (NASDAQ: RNWK) and Solera (NYSE:SLH) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for RealNetworks and Solera, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RealNetworks 0 0 1 0 3.00
Solera 0 0 0 0 N/A

RealNetworks currently has a consensus target price of $6.50, indicating a potential upside of 90.06%. Given RealNetworks’ higher possible upside, analysts plainly believe RealNetworks is more favorable than Solera.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RealNetworks $120.47 million 1.06 -$36.55 million ($0.73) -4.68
Solera N/A N/A N/A ($1.98) -28.20

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

Profitability

This table compares RealNetworks and Solera’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RealNetworks -21.67% -32.64% -21.89%
Solera 18.15% N/A 6.01%

Insider & Institutional Ownership

51.9% of RealNetworks shares are held by institutional investors. 37.9% of RealNetworks shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Solera pays an annual dividend of $0.90 per share and has a dividend yield of 1.6%. RealNetworks does not pay a dividend. Solera pays out -45.5% of its earnings in the form of a dividend. Solera has increased its dividend for 7 consecutive years.

Risk & Volatility

RealNetworks has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500. Comparatively, Solera has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500.

Summary

RealNetworks beats Solera on 7 of the 13 factors compared between the two stocks.

RealNetworks Company Profile

RealNetworks, Inc. creates applications and services that enable to connect with digital media. The Company connects consumers with their digital media directly and through partners, focusing on supporting various network, devices, media types and social networks. It operates through three segments: Consumer Media, Mobile Services and Games. Within its Consumer Media business, its RealPlayer media player software includes features and services that enable consumers to discover, play, download, manage and edit digital video, stream audio and video, download and save photos and videos from the Web, transfer and share content on social networks, and edit their own photo and video content. The Mobile Services segment consists of digital media services it provides to mobile and online service providers as software as a service offerings. It develops, publishes, licenses and distributes casual games.

Solera Company Profile

Solera Holdings, Inc. is a United States-based company, which is a provider of risk and asset management software and services to the automotive and property marketplace, including the global property and casualty (P&C) insurance industry. The Company is engaged in cognitive technologies for the automotive and home ownership ecosystems. The Company’s solutions and services bring together consumers, insurers, banks, governments, manufacturers, owners, wholesalers, retailers, and service and repair industries, into digitally unified ecosystems that enable the management, protection and security of assets throughout their lifecycles. The Company’s product platforms include Audatex, AutoPoint, CAP/HPI, Digidentity, Explore Data, Hollander, Identifix, Inpart and TitleTec, as well as the company’s application, Digital Garage. The Company processes over 240 million transactions annually for approximately 200,000 partners in approximately 80 countries.

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