Analyzing ServiceNow (NYSE:NOW) & Dynatrace (NYSE:DT)

ServiceNow (NYSE:NOW) and Dynatrace (NYSE:DT) are both large-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Valuation and Earnings

This table compares ServiceNow and Dynatrace’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ServiceNow $3.46 billion 21.38 $626.70 million $0.65 596.86
Dynatrace $545.80 million 18.55 -$418.02 million ($0.53) -68.02

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

Profitability

This table compares ServiceNow and Dynatrace’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ServiceNow 18.19% 9.47% 3.11%
Dynatrace -76.59% -29.81% -7.05%

Analyst Recommendations

This is a summary of current recommendations for ServiceNow and Dynatrace, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ServiceNow 0 5 24 1 2.87
Dynatrace 0 4 14 0 2.78

ServiceNow presently has a consensus price target of $364.15, indicating a potential downside of 6.14%. Dynatrace has a consensus price target of $33.42, indicating a potential downside of 7.30%. Given ServiceNow’s stronger consensus rating and higher possible upside, analysts clearly believe ServiceNow is more favorable than Dynatrace.

Institutional & Insider Ownership

96.0% of ServiceNow shares are owned by institutional investors. Comparatively, 92.9% of Dynatrace shares are owned by institutional investors. 1.0% of ServiceNow shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

ServiceNow beats Dynatrace on 14 of the 14 factors compared between the two stocks.

ServiceNow Company Profile

ServiceNow, Inc. provides enterprise cloud computing solutions that define, structure, manage, and automate services for enterprises worldwide. The company offers information technology (IT) service management applications, as well as digital workflow products for customer service, human resources, security operations, integrated risk management, and other enterprise departments. It operates the Now platform that offers workflow automation, electronic service catalogs and portals, configuration management systems, data benchmarking, performance analytics, encryption, and collaboration and development tools. The company also provides IT service management product suite for enterprise's employees, customers, and partners; IT operations management product that connects a customer's physical and cloud-based IT infrastructure with applications and platforms; IT Asset Management product to automate IT asset lifecycles with workflows; IT business management product suite to manage IT priorities; and enterprise development operations product for developers' toolchain. In addition, it offers customer service management product for customer service cases and requests; human resources service delivery product; security operations product for security operations management requirements of third-party; governance, risk, and compliance product to create policies and controls; and field service management application. Further, the company provides professional services, training services and certification programs, and customer support services. It serves enterprises in industries, such as financial services, consumer products, IT services, healthcare, government, education, and technology. The company sells its products through its direct sales team, as well as through resale partners. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.

Dynatrace Company Profile

Dynatrace, Inc. provides a software intelligence platform for the enterprise cloud applications. It offers Dynatrace, a platform for running an enterprise cloud. The company's products include AppMon, Classic Real User Monitoring, Network Application Monitoring, and Synthetic Classic. Its platform allows its customers to modernize and automate IT operations, develop and release software, and enhance user experiences. The company also offers implementation, consulting, and training services. Dynatrace, Inc. markets its products through a combination of direct sales team and a network of partners, including resellers, system integrators, and managed service providers. It serves customers in various industries comprising banking, insurance, retail, manufacturing, travel, and software. The company operates in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Dynatrace, Inc. is headquartered in Waltham, Massachusetts.

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