Paycom Software (NYSE:PAYC) and Arlo Technologies (NYSE:ARLO) Financial Contrast

Arlo Technologies (NYSE:ARLO) and Paycom Software (NYSE:PAYC) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, risk and valuation.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Arlo Technologies and Paycom Software, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arlo Technologies	0	2	3	0	2.60
Paycom Software	1	11	4	1	2.29

Arlo Technologies currently has a consensus target price of $23.00, suggesting a potential upside of 81.10%. Paycom Software has a consensus target price of $202.86, suggesting a potential upside of 50.62%. Given Arlo Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Arlo Technologies is more favorable than Paycom Software.

Earnings & Valuation

This table compares Arlo Technologies and Paycom Software”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arlo Technologies	$510.89 million	2.63	-$30.50 million	$0.03	423.33
Paycom Software	$1.88 billion	4.02	$502.00 million	$8.04	16.75

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

Volatility and Risk

Arlo Technologies has a beta of 1.64, indicating that its share price is 64% more volatile than the S&P 500. Comparatively, Paycom Software has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.

Profitability

This table compares Arlo Technologies and Paycom Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arlo Technologies	0.84%	2.00%	0.71%
Paycom Software	22.65%	24.79%	9.02%

Institutional & Insider Ownership

83.2% of Arlo Technologies shares are held by institutional investors. Comparatively, 87.8% of Paycom Software shares are held by institutional investors. 5.2% of Arlo Technologies shares are held by insiders. Comparatively, 10.9% of Paycom Software shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Paycom Software beats Arlo Technologies on 11 of the 15 factors compared between the two stocks.

About Arlo Technologies

Arlo Technologies, Inc., together with its subsidiaries, provides a cloud-based platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific regions. The company offers Arlo Essential Cameras and Doorbells (2nd Generation) delivers smart home protection, including automated privacy shield, 180-degree field of view, and 2K video resolution; Arlo Home Security System, an all-in-one multi-sensor that provides access to security experts for monitoring and responding to emergency situations; Arlo Pro 5S, a wireless 2K video resolution security camera; Arlo Go 2, a camera for monitoring remote areas, large properties, construction sites, vacation homes, boat or RV slips, and hard-to-access areas; Arlo Ultra 2 provides 4K video with HDR, an ultra-wide, 180-degree field of view, auto zoom and tracking on moving objects, and color night vision; and Arlo Floodlight Camera, a wire-free floodlight camera. It provides security system accessories, charging accessories, and mounts. In addition, the company offers Arlo Secure subscriptions, including emergency response secure plus plan; 2K secure plan and 4K secure plus plan cloud-based video recording; unlimited cameras; advanced object detection; smart interactive notifications; smoke and CO alarm detection; cloud-based activity zone; call a friend; and 24/7 priority support and professional monitoring services; Arlo Total Security, a subscription which provides 24/7 professional monitoring and security hardware; Arlo Safe, a personal safety app that offers one-touch emergency response, family safety, and crash detection and response services; and Arlo SmartCloud, a SaaS solution that delivers security cloud services for business. It sells its products through retailers, wholesale distributors, broadcast channels, wireless carriers, and security solution providers, as well as through its website. Arlo Technologies, Inc. was incorporated in 2018 and is headquartered in Carlsbad, California.

About Paycom Software

Paycom Software, Inc. provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States. It offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement. The company's HCM solution provides a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling, time-off requests, labor allocation, labor management reports/push reporting, geofencing/geotracking, and Microfence, a proprietary Bluetooth. Its HCM solution also offers payroll applications comprising better employee transaction interface, payroll and tax management, payroll card, Everyday, Paycom pay, Client Action Center, expense management, mileage tracker/fixed and variable rates, garnishment administration, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning, as well as my analytics. In addition, its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration/benefits to carrier; benefit enrollment service; COBRA administration; personnel action and performance discussion forms; surveys; 401(k) reporting; report center; and affordable care act applications, as well as Clue, which securely collects, tracks, and manages the vaccination and testing data of the workforce. Paycom Software, Inc. was founded in 1998 and is based in Oklahoma City, Oklahoma.