Critical Analysis: Sprout Social (NASDAQ:SPT) vs. Upwork (NASDAQ:UPWK)

Sprout Social (NASDAQ:SPT) and Upwork (NASDAQ:UPWK) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, valuation, profitability, dividends and earnings.

Institutional & Insider Ownership

77.7% of Upwork shares are owned by institutional investors. 9.6% of Sprout Social shares are owned by company insiders. Comparatively, 7.6% of Upwork shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Sprout Social and Upwork”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprout Social	$457.55 million	0.87	-$43.33 million	($0.74)	-9.05
Upwork	$787.78 million	1.62	$115.43 million	$0.84	12.28

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Sprout Social and Upwork, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprout Social	2	5	4	0	2.18
Upwork	0	6	7	0	2.54

Sprout Social presently has a consensus price target of $13.11, indicating a potential upside of 95.83%. Upwork has a consensus price target of $22.60, indicating a potential upside of 119.12%. Given Upwork’s stronger consensus rating and higher possible upside, analysts clearly believe Upwork is more favorable than Sprout Social.

Risk & Volatility

Sprout Social has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Upwork has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Profitability

This table compares Sprout Social and Upwork’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sprout Social	-9.47%	-16.10%	-6.58%
Upwork	14.65%	18.76%	9.03%

Summary

Upwork beats Sprout Social on 13 of the 14 factors compared between the two stocks.

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.

About Upwork

Upwork Inc., together with its subsidiaries, operates a work marketplace that connects businesses with various independent professionals and agencies in the United States, India, the Philippines, and internationally. The company’s work marketplace provides access to talent with various skills across a range of categories, including administrative support, sales and marketing, design and creative, and customer service, as well as web, mobile, and software development. Its work marketplace also enables clients to streamline workflows, such as talent sourcing, outreach, and contracting. The company’s work marketplace offers access to various functionalities for remote engagements with talent, including communication and collaboration, ability to receive talent invoices through their work marketplace, and payment protection. Its marketplace offerings include Upwork Payroll and Upwork Enterprise, as well as managed and escrow services. The company was formerly known as Elance-oDesk, Inc. and changed its name to Upwork Inc. in May 2015. Upwork Inc. was incorporated in 2013 and is headquartered in San Francisco, California.