Contrasting Five9 (NASDAQ:FIVN) & Rapid7 (NASDAQ:RPD)

Five9 (NASDAQ:FIVN) and Rapid7 (NASDAQ:RPD) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Profitability

This table compares Five9 and Rapid7’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Five9	3.43%	11.21%	4.35%
Rapid7	2.72%	47.33%	3.01%

Volatility and Risk

Five9 has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, Rapid7 has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Valuation & Earnings

This table compares Five9 and Rapid7″s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Five9	$1.15 billion	1.21	$39.42 million	$0.46	38.57
Rapid7	$859.79 million	0.47	$23.38 million	$0.36	17.00

Five9 has higher revenue and earnings than Rapid7. Rapid7 is trading at a lower price-to-earnings ratio than Five9, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for Five9 and Rapid7, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Five9	1	7	13	0	2.57
Rapid7	3	17	2	0	1.95

Five9 currently has a consensus price target of $27.12, indicating a potential upside of 52.86%. Rapid7 has a consensus price target of $12.53, indicating a potential upside of 104.68%. Given Rapid7’s higher possible upside, analysts clearly believe Rapid7 is more favorable than Five9.

Institutional & Insider Ownership

96.6% of Five9 shares are held by institutional investors. Comparatively, 95.7% of Rapid7 shares are held by institutional investors. 1.6% of Five9 shares are held by company insiders. Comparatively, 2.4% of Rapid7 shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Five9 beats Rapid7 on 11 of the 14 factors compared between the two stocks.

About Five9

Five9, Inc., together with its subsidiaries, provides intelligent cloud software for contact centers in the United States, India, and internationally. It offers a virtual contact center cloud platform that delivers a suite of applications, which enables the breadth of contact center-related customer service, sales, and marketing functions. The company’s platform comprises of including interactive virtual agent, agent assist, workflow automation, workforce engagement management, AI insights, and AI summaries that allows to manage and optimize customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces. It also matches each customer interaction with an agent resource and delivers customer data to the agent in real-time through integrations with adjacent enterprise applications, such as CRM software, to optimize the customer experience and enhance agent productivity. The company serves customers in various industries, such as banking and financial services, business process outsourcers, retail, healthcare, technology, and education. Five9, Inc. was incorporated in 2001 and is headquartered in San Ramon, California.

About Rapid7

Rapid7, Inc. provides cybersecurity solutions under the Rapid7, Nexpose, and Metasploit brand names. The company offers endpoint to cloud data collection and sharing applications, such as Rapid7 Insight Agent, a software-based agent that is used on assets across on-premises and cloud environments to centralize and monitor data on company's platform; Rapid7 Insight Network Sensor that analyzes raw end-to-end network traffic to increase visibility into user activity, pinpoint real threats, and investigations; Rapid7 Cloud Event Data Harvesting that offers visibility into changes made to cloud resources; and third-party integrations and ecosystem, as well as orchestration and automation solutions. It also offers various platforms, including Rapid7 managed threat complete consisting of managed detection response that delivers end-to-end threat detection and response, as well as offloads day-to-day vulnerability management operations. In addition, it provides Rapid7 threat complete consisting of InsightIDR, a security information and event management, and extended detection and response solution; and InsightVM, a vulnerability management solution that provides visibility across on-premise and remote endpoints for security teams to evaluate the business risks, and configurations, and share with their IT counterparts for remediation. Further, the company offers Rapid7 cloud risk complete, which includes InsightCloudSec, a cloud risk and compliance management solution; and InsightAppSec, a dynamic application security testing tool. It also provides professional services. It serves a range of industries, including business services, pharmaceuticals, technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, travel and transportation, government, online services, telecommunications, and professional services. The company was incorporated in 2000 and is headquartered in Boston, Massachusetts.