Twilio (NYSE:TWLO – Get Free Report) and Sprout Social (NASDAQ:SPT – Get Free Report) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.
Volatility and Risk
Twilio has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Sprout Social has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.
Institutional and Insider Ownership
84.3% of Twilio shares are held by institutional investors. 4.5% of Twilio shares are held by company insiders. Comparatively, 11.0% of Sprout Social shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Twilio | 2 | 10 | 11 | 0 | 2.39 |
Sprout Social | 1 | 7 | 7 | 0 | 2.40 |
Twilio currently has a consensus target price of $93.61, indicating a potential downside of 15.57%. Sprout Social has a consensus target price of $45.46, indicating a potential upside of 43.50%. Given Sprout Social’s stronger consensus rating and higher probable upside, analysts clearly believe Sprout Social is more favorable than Twilio.
Valuation and Earnings
This table compares Twilio and Sprout Social”s gross revenue, earnings per share (EPS) and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Twilio | $4.34 billion | 3.92 | -$1.02 billion | ($2.57) | -43.14 |
Sprout Social | $392.40 million | 4.63 | -$66.43 million | ($1.20) | -26.40 |
Sprout Social has lower revenue, but higher earnings than Twilio. Twilio is trading at a lower price-to-earnings ratio than Sprout Social, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Twilio and Sprout Social’s net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Twilio | -10.65% | 0.85% | 0.71% |
Sprout Social | -17.24% | -40.94% | -15.70% |
About Twilio
Twilio Inc., together with its subsidiaries, provides customer engagement platform solutions in the United States and internationally. It operates through two segments, Twilio Communications and Twilio Segment. The company provides various application programming interfaces and software solutions for communications between customers and end users, including messaging, voice, email, flex, marketing campaigns, and user identity and authentication. It also offers software products to build direct, personalized relationships with their end users, such as segment, a platform that provides tools for first-party data by unifying real-time information collected; and engage, an automation platform for the delivery of omnichannel campaigns. Twilio Inc. was incorporated in 2008 and is headquartered in San Francisco, California.
About Sprout Social
Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company provides cloud software for social messaging, data and workflows in a unified system of record, intelligence, and action. It offers integrated tools, such as social engagement/response; publishing; reporting and analytics; social listening and business intelligence; reputation management; social commerce; employee advocacy; and automation and workflows. In addition, the company provides smart inbox, social customer relationship management, social monitoring and alerts, customer service tools, and automation; and centralized content planning, creation, and publishing, automated scheduling, content performance reporting, suggested content, message approval workflows, publishing permissions and governance, and content and asset libraries. Further, it offers social media; content performance, customer service and team, custom report builder, and reporting API; and market research, brand health, competitive insights, consumer trends, and product feedback; and social commerce, reputation management, employee advocacy, mobile applications, and chat bot creation and management. Additionally, the company offers professional services consisting of consulting and training services. It serves social and community management; public relations; marketing; influencer marketing; customer service and care; commerce, sales and customer acquisition; recruiting and hiring, product development, and business strategy; and small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. Sprout Social, Inc. was incorporated in 2010 and is headquartered in Chicago, Illinois.
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