Analyzing Dropbox (NASDAQ:DBX) and HealthStream (NASDAQ:HSTM)

Dropbox (NASDAQ:DBX) and HealthStream (NASDAQ:HSTM) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Profitability

This table compares Dropbox and HealthStream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dropbox	18.71%	-30.01%	17.41%
HealthStream	6.39%	6.47%	4.44%

Analyst Ratings

This is a summary of recent ratings and target prices for Dropbox and HealthStream, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dropbox	2	3	1	0	1.83
HealthStream	0	3	0	0	2.00

Dropbox presently has a consensus price target of $27.00, indicating a potential downside of 11.82%. HealthStream has a consensus price target of $24.00, indicating a potential downside of 15.73%. Given Dropbox’s higher possible upside, research analysts clearly believe Dropbox is more favorable than HealthStream.

Volatility & Risk

Dropbox has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, HealthStream has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Earnings & Valuation

This table compares Dropbox and HealthStream”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dropbox	$2.52 billion	2.83	$508.40 million	$1.83	16.73
HealthStream	$304.06 million	2.74	$18.34 million	$0.67	42.51

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

Insider and Institutional Ownership

94.8% of Dropbox shares are held by institutional investors. Comparatively, 69.6% of HealthStream shares are held by institutional investors. 35.5% of Dropbox shares are held by insiders. Comparatively, 20.4% of HealthStream shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Dropbox beats HealthStream on 11 of the 14 factors compared between the two stocks.

About Dropbox

Dropbox, Inc. provides a content collaboration platform worldwide. The company's platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was incorporated in 2007 and is headquartered in San Francisco, California.

About HealthStream

HealthStream, Inc. provides Software-as-a-Service (SaaS) based applications for healthcare organizations in the United States. The company’s solutions help healthcare organizations in meeting their ongoing clinical development, talent management, training, education, assessment, competency management, safety and compliance, and scheduling, as well as provider credentialing, privileging, and enrollment needs. It offers hStream, a technology platform that powers a range of healthcare workforce solutions. The company provides its solutions to customers across a range of entities within the healthcare industry, including private, not-for-profit, and government entities, as well as pharmaceutical and medical device companies through its direct sales teams. The company was incorporated in 1990 and is headquartered in Nashville, Tennessee.