Reviewing Zscaler (ZS) and Monotype Imaging (TYPE)

Zscaler (NASDAQ: ZS) and Monotype Imaging (NASDAQ:TYPE) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitability, dividends, earnings, institutional ownership and risk.

Valuation and Earnings

This table compares Zscaler and Monotype Imaging’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zscaler N/A N/A N/A N/A N/A
Monotype Imaging $235.79 million 3.85 $11.56 million $0.53 40.57

Monotype Imaging has higher revenue and earnings than Zscaler.

Institutional & Insider Ownership

17.9% of Zscaler shares are owned by institutional investors. Comparatively, 89.0% of Monotype Imaging shares are owned by institutional investors. 3.4% of Monotype Imaging shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Zscaler and Monotype Imaging, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zscaler 0 6 3 1 2.50
Monotype Imaging 1 0 1 0 2.00

Zscaler presently has a consensus target price of $30.60, indicating a potential upside of 15.82%. Monotype Imaging has a consensus target price of $27.50, indicating a potential upside of 27.91%. Given Monotype Imaging’s higher probable upside, analysts plainly believe Monotype Imaging is more favorable than Zscaler.

Profitability

This table compares Zscaler and Monotype Imaging’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zscaler N/A N/A N/A
Monotype Imaging 4.76% 6.99% 4.34%

Dividends

Monotype Imaging pays an annual dividend of $0.46 per share and has a dividend yield of 2.1%. Zscaler does not pay a dividend. Monotype Imaging pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Monotype Imaging beats Zscaler on 8 of the 12 factors compared between the two stocks.

Zscaler Company Profile

Zscaler, Inc. operates as a cloud security company worldwide. The company develops a software-as-a-service based security platform that secures access for users and devices to applications and services. It serves airline and transportation, conglomerate, consumer good and retail, financial service, healthcare, manufacturing, media and communication, public sector and education, technology, and telecommunications service industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.

Monotype Imaging Company Profile

Monotype Imaging Holdings Inc. develops, markets, and licenses technologies and fonts in the United States, the United Kingdom, Germany, Japan, and rest of Asia. The company offers font products, including its own fonts from the Monotype Libraries, as well as fonts from third parties through its e-commerce Websites, including myfonts.com, fonts.com, fontshop.com, and linotype.com. It also provides font scaling engine and font compression technologies that are compatible with virtually font formats and industry standards, including the PostScript and PCL printing languages; font solutions for consumer device manufacturers, including Edge and SmartHint technologies for precise pixel adjustments to enable fonts to display with optimal quality in suboptimal display environments; printer driver kits; and fonts for printer manufacturers. In addition, the company offers screen imaging technologies; a mobile engagement platform that enables brands and advertisers to create and distribute branded content; brand engagement and social endorsement technologies through mobile and digital channels; and various tools to enhance user experiences. Further, it provides expert consultation and custom type design services; and technology support and professional services. The company provides approximately 14,000 typeface designs, and supports approximately 250 Latin and non-Latin languages. Its solutions are used in various devices, including laser printers, digital copiers, mobile phones, automotive displays, navigation devices, e-book readers, tablets, digital cameras, digital televisions, set-top boxes, consumer appliances, and Internet of things devices, as well as in various software applications and operating systems. The company serves content creators, marketers, consumer device manufacturers, and independent software vendors and developers. Monotype Imaging Holdings Inc. is headquartered in Woburn, Massachusetts.

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