Shopify (NYSE:SHOP) versus 2U (NASDAQ:TWOU) Head-To-Head Review

Shopify (NYSE:SHOP) and 2U (NASDAQ:TWOU) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.

Institutional & Insider Ownership

69.3% of Shopify shares are held by institutional investors. Comparatively, 80.5% of 2U shares are held by institutional investors. 3.7% of 2U shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Shopify and 2U’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shopify	1.87%	4.48%	3.52%
2U	-33.58%	-7.92%	-1.55%

Valuation & Earnings

This table compares Shopify and 2U’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shopify	$7.06 billion	12.79	$132.00 million	$0.09	779.92
2U	$945.95 million	0.02	-$317.61 million	($3.94)	-0.06

Shopify has higher revenue and earnings than 2U. 2U is trading at a lower price-to-earnings ratio than Shopify, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Shopify and 2U, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shopify	3	17	16	0	2.36
2U	0	8	1	0	2.11

Shopify currently has a consensus target price of $78.62, suggesting a potential upside of 12.02%. 2U has a consensus target price of $4.31, suggesting a potential upside of 1,638.35%. Given 2U’s higher possible upside, analysts plainly believe 2U is more favorable than Shopify.

Volatility & Risk

Shopify has a beta of 2.22, indicating that its stock price is 122% more volatile than the S&P 500. Comparatively, 2U has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500.

Summary

Shopify beats 2U on 11 of the 14 factors compared between the two stocks.

About Shopify

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping, and securing working capital. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is headquartered in Ottawa, Canada.

About 2U

2U, Inc. operates as an online education platform company in the United States and internationally. The company operates through two segments, Degree Program and Alternative Credential. The Degree Program segment provides the technology and services to nonprofit colleges and universities to enable the online delivery of degree programs. This segment targets students seeking an undergraduate or graduate degree. The Alternative Credential segment offers online open courses, executive education programs, technical, skills-based boot camps, and micro-credential programs through nonprofit colleges and universities, and other organizations. This segment targets students seeking to reskill or upskill for career or personal development through shorter duration and lower-priced offerings. It provides a platform that provides technology and technology-enabled services; and edX.org, a marketplace that allows to access various catalog of online offerings, which include free offerings and graduate degrees. The company was formerly known as 2Tor Inc. and changed its name to 2U, Inc. in October 2012. 2U, Inc. was incorporated in 2008 and is headquartered in Lanham, Maryland.