Comparing Q2 (QTWO) & Datawatch (DWCH)

Q2 (NYSE: QTWO) and Datawatch (NASDAQ:DWCH) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Institutional and Insider Ownership

90.8% of Q2 shares are owned by institutional investors. Comparatively, 39.8% of Datawatch shares are owned by institutional investors. 24.5% of Q2 shares are owned by company insiders. Comparatively, 9.4% of Datawatch shares are owned 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.

Volatility and Risk

Q2 has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, Datawatch has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Q2 and Datawatch, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Q2 0 5 7 0 2.58
Datawatch 0 1 2 0 2.67

Q2 presently has a consensus target price of $46.09, indicating a potential upside of 6.69%. Datawatch has a consensus target price of $14.00, indicating a potential upside of 36.59%. Given Datawatch’s stronger consensus rating and higher possible upside, analysts plainly believe Datawatch is more favorable than Q2.

Profitability

This table compares Q2 and Datawatch’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Q2 -15.27% -20.50% -10.45%
Datawatch -6.89% -3.81% -2.56%

Earnings & Valuation

This table compares Q2 and Datawatch’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Q2 $150.22 million 11.98 -$36.35 million ($0.69) -62.61
Datawatch $36.26 million 3.49 -$3.99 million ($0.22) -46.59

Datawatch has lower revenue, but higher earnings than Q2. Q2 is trading at a lower price-to-earnings ratio than Datawatch, indicating that it is currently the more affordable of the two stocks.

Summary

Datawatch beats Q2 on 7 of the 13 factors compared between the two stocks.

About Q2

Q2 Holdings, Inc. is a provider of cloud-based digital banking solutions. The Company enables regional and community financial institutions (RCFIs), to deliver a suite of integrated digital banking services. The Company’s solutions all operate on a common platform that supports the delivery of unified digital banking services across online, mobile and voice channels. Its platform provides a single point of management enabling RCFIs to deliver targeted experiences, including tailored rights, features and branding to account holders. Its cloud-based solutions and common platform provide its RCFI customers with a view of account holder access and activity across devices and channels. Its solutions include Q2online, Q2 Risk & Fraud Analytics, Q2 Corporate, Q2 SMART, Q2mobility Application, Q2mobile Remote Deposit Capture, Q2text, Q2themes, Q2clarity, Centrix Dispute Tracking System (DTS), Centrix Payments I.Q. System (PIQS), and Centrix Exact/Transaction Management System (Exact/TMS).

About Datawatch

Datawatch Corporation is engaged in the design, development, marketing, distribution and support of business computer software primarily for the self-service data preparation and visual data discovery markets. The Company also provides services, including implementation and support of its software products, as well as training on their use and administration. The Company’s product family includes Datawatch Monarch, Datawatch Panopticon and Datawatch Report Mining Server (RMS). The Company offers its enterprise products through perpetual licenses and subscription pricing models. The Company also offers educational services for customers and partners implementing and learning about the platform, maintenance and support, and professional services to provide in-depth technical assistance for software implementations. The Company offers an array of live and virtual classroom instruction, including private onsite classes.

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