Palo Alto Networks (NASDAQ:PANW) and Smith Micro Software (NASDAQ:SMSI) Head-To-Head Contrast

Smith Micro Software (NASDAQ:SMSI) and Palo Alto Networks (NASDAQ:PANW) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, valuation and risk.

Analyst Ratings

This is a breakdown of current ratings and price targets for Smith Micro Software and Palo Alto Networks, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Micro Software	1	0	2	0	2.33
Palo Alto Networks	0	11	39	0	2.78

Smith Micro Software presently has a consensus target price of $12.50, indicating a potential upside of 431.91%. Palo Alto Networks has a consensus target price of $398.55, indicating a potential upside of 2.07%. Given Smith Micro Software’s higher probable upside, equities analysts clearly believe Smith Micro Software is more favorable than Palo Alto Networks.

Insider and Institutional Ownership

20.8% of Smith Micro Software shares are owned by institutional investors. Comparatively, 79.8% of Palo Alto Networks shares are owned by institutional investors. 34.7% of Smith Micro Software shares are owned by company insiders. Comparatively, 1.4% of Palo Alto Networks shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Smith Micro Software and Palo Alto Networks”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smith Micro Software	$17.36 million	0.76	-$29.33 million	($3.52)	-0.67
Palo Alto Networks	$11.48 billion	27.82	$307.00 million	$0.51	765.61

Palo Alto Networks has higher revenue and earnings than Smith Micro Software. Smith Micro Software is trading at a lower price-to-earnings ratio than Palo Alto Networks, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Smith Micro Software has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Palo Alto Networks has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Profitability

This table compares Smith Micro Software and Palo Alto Networks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith Micro Software	-92.60%	-44.59%	-31.78%
Palo Alto Networks	2.67%	8.50%	4.35%

Summary

Palo Alto Networks beats Smith Micro Software on 12 of the 14 factors compared between the two stocks.

About Smith Micro Software

Smith Micro Software, Inc. engages in the development and sale of software to enhance the mobile experience to wireless and cable service providers in the Americas, Europe, the Middle East, and Africa. The company offers SafePath Family, SafePath IoT, SafePath Home, and SafePath Premium product suite, which provides tools to protect digital lifestyles and manage connected devices inside and outside the home; and CommSuite, a messaging platform that helps mobile service provides deliver a next-generation voicemail experience to mobile subscribers, as well as enables multi-language voice-to-text (VTT) transcription messaging. It also offers ViewSpot, a retail display management platform that provides on-screen and interactive demos to wireless carriers and other smartphone retailers; and technical support and customer services. Smith Micro Software, Inc. was founded in 1982 and is headquartered in Pittsburgh, Pennsylvania.

About Palo Alto Networks

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; and Panorama, a security management solution for the global control of network security platform as a virtual or a physical appliance. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention. In addition, the company offers cloud security, secure access, security operations, and threat intelligence and security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. Palo Alto Networks, Inc. was incorporated in 2005 and is headquartered in Santa Clara, California.