Analyzing PagerDuty (NYSE:PD) and Q2 (NYSE:QTWO)

Q2 (NYSE:QTWO) and PagerDuty (NYSE:PD) are both 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Q2 and PagerDuty, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Q2	0	4	9	1	2.79
PagerDuty	2	5	3	0	2.10

Q2 currently has a consensus target price of $74.83, indicating a potential upside of 8.05%. PagerDuty has a consensus target price of $12.56, indicating a potential downside of 28.15%. Given Q2’s stronger consensus rating and higher probable upside, equities analysts clearly believe Q2 is more favorable than PagerDuty.

Valuation & Earnings

This table compares Q2 and PagerDuty”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Q2	$846.20 million	5.10	$52.01 million	$1.40	49.47
PagerDuty	$492.55 million	2.79	$173.85 million	$2.00	8.74

PagerDuty has lower revenue, but higher earnings than Q2. PagerDuty is trading at a lower price-to-earnings ratio than Q2, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

97.3% of PagerDuty shares are held by institutional investors. 0.9% of Q2 shares are held by company insiders. Comparatively, 6.0% of PagerDuty 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.

Profitability

This table compares Q2 and PagerDuty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Q2	10.87%	17.04%	8.80%
PagerDuty	37.50%	18.52%	4.84%

Volatility and Risk

Q2 has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, PagerDuty has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Summary

Q2 beats PagerDuty on 9 of the 15 factors compared between the two stocks.

About Q2

Q2 Holdings, Inc. provides cloud-based digital solutions to regional and community financial institutions in the United States. The company offers Digital Banking Platform, an end-to-end digital banking platform supports its financial institution customers in their delivery of unified digital banking services across digital channels. Its digital banking platform solutions, comprising Q2 Consumer Banking, Q2 Small Business and Commercial, Q2mobile Remote Deposit Capture, Q2 Sentinel, Q2 Patrol, Q2 SMART, Q2 Contextual Personal Financial Management, Q2 Goals, Q2 CardSwap, Q2 Gro, Q2 Innovation Studio, Q2 Biller Direct, ClickSWITCH, Sensibill, Centrix Dispute Tracking System, Centrix Payments I.Q. System, and Centrix Exact/Transaction Management System. The company also provides lending solutions, which consists precisionlender solutions, a cloud-based platform, data-driven sales enablement, relationship pricing, and portfolio management solution includes precisionlender platform, premium treasury pricing, data studio, and Andi; and Q2 Cloud Lending solutions, a cloud-based digital lending platform and end-to-end lending solution that allows financial institutions, FinTechs, and Alt-FIs to automate and digitize their lending activities, supporting digital lending applications, scoring, underwriting, servicing, and collections for multiple assets classes comprising Q2 CL portal, originate, loan, marketplace, and collections. In addition, it offers Q2 Innovation Studio, an application program interface, or API, based and software development kit, or SDK, based open technology platform; and Helix, a cloud-native, real-time core processing platform. The company was formerly known as CBG Holdings, Inc. and changed its name to Q2 Holdings, Inc. in March 2013. Q2 Holdings, Inc. was founded in 2004 and is headquartered in Austin, Texas.

About PagerDuty

PagerDuty, Inc. engages in the operation of a digital operations management platform in the United States and internationally. The company’s digital operations management platform collects data and digital signals from virtually any software-enabled system or device and leverage machine learning to correlate, process, and predict opportunities and issues. Its platform includes PagerDuty Incident Management that provides a real-time view across the status of a digital service while incorporating noise reduction to remove false positives; AIOps that applies machine learning to correlate and automate the identification of incidents from billions of events; Process Automation offers centralized design time and run time environment for orchestrating automated workflows that span across departments, technologies, and networks; Customer Service Operations, which is offered to orchestrate, automate, and scale responses to customer impacting issues. It serves various industries, including software and technology, telecommunications, retail, travel and hospitality, media and entertainment, and financial services. PagerDuty, Inc. was founded in 2009 and is headquartered in San Francisco, California.