Critical Survey: Tenable (NASDAQ:TENB) versus DigitalOcean (NYSE:DOCN)

Tenable (NASDAQ:TENB) and DigitalOcean (NYSE:DOCN) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.

Valuation and Earnings

This table compares Tenable and DigitalOcean”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tenable	$999.41 million	3.33	-$36.12 million	($0.10)	-302.20
DigitalOcean	$901.43 million	16.16	$259.26 million	$2.29	60.95

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

Insider & Institutional Ownership

89.1% of Tenable shares are owned by institutional investors. Comparatively, 49.8% of DigitalOcean shares are owned by institutional investors. 1.7% of Tenable shares are owned by insiders. Comparatively, 1.0% of DigitalOcean shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Tenable and DigitalOcean, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tenable	1	10	9	0	2.40
DigitalOcean	0	3	9	1	2.85

Tenable currently has a consensus price target of $29.16, suggesting a potential downside of 3.51%. DigitalOcean has a consensus price target of $146.36, suggesting a potential upside of 4.87%. Given DigitalOcean’s stronger consensus rating and higher possible upside, analysts clearly believe DigitalOcean is more favorable than Tenable.

Profitability

This table compares Tenable and DigitalOcean’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tenable	-1.15%	7.85%	1.49%
DigitalOcean	24.97%	88.86%	6.95%

Volatility & Risk

Tenable has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, DigitalOcean has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500.

Summary

DigitalOcean beats Tenable on 11 of the 14 factors compared between the two stocks.

About Tenable

Tenable Holdings, Inc. provides cyber exposure solutions for in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. Its platforms include Tenable Vulnerability Management, a cloud-delivered software as a service that provides organizations with a risk-based view of traditional and modern attack surfaces; Tenable Cloud Security, a cloud-native cloud security solutions for security teams to continuously assess the security posture; Tenable Identity Exposure, a solution to secure Active Directory environments; Tenable Web App Scanning, which provides scanning for modern web applications; Tenable Lumin Exposure View, a measurement tool; Tenable Attack Surface Management, an external attack surface management solution; Tenable Security Center, an on-premises solution that provides a risk-based view of an organization’s IT, security and compliance posture; and Tenable OT Security, an operational technology security solution which provides threat detection, asset tracking, vulnerability management, and configuration control capabilities. The company also offers Nessus, a vulnerability assessment solution for cybersecurity industry and enterprise platform; and Nessus Expert, that enables users to programmatically detect cloud infrastructure misconfigurations and vulnerabilities in the design and build phase. Tenable Holdings, Inc. was founded in 2002 and is headquartered in Columbia, Maryland.

About DigitalOcean

DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC). The company also provides platform-as-a-service (PaaS) solutions, such as managed databases; managed Kubernetes and container registry; application platform to build, deploy, and scale applications; Functions, a serverless compute solution; and Uptime for real-time uptime and latency alerts, as well as software-as-a-service (SaaS), including managed hosting and DigitalOcean Marketplace, a platform where developers can find pre-configured applications and solutions. In addition, it offers artificial intelligence (AI)/machine learning (ML) applications comprising GPU virtual machines for scaling AI applications; Notebooks, a simple cloud workspace that runs on GPUs that provides a managed interactive development environment for exploring data, and training and building machine learning models; and Deployments for deploying their machine learning model as an API endpoint. The company’s customers include software engineers, researchers, data scientists, system administrators, students, and hobbyists. Its customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and AI/ML applications. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.