Critical Survey: Elastic (NYSE:ESTC) versus QAD (NYSE:QADA)

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Elastic (NYSE:ESTC) and QAD (NASDAQ:QADA) are both business services companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Institutional and Insider Ownership

46.5% of Elastic shares are owned by institutional investors. Comparatively, 46.1% of QAD shares are owned by institutional investors. 51.8% of Elastic shares are owned by company insiders. Comparatively, 51.8% of QAD shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Elastic and QAD’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Elastic $271.65 million 21.19 -$102.30 million ($1.80) -43.56
QAD $333.02 million 2.46 $10.43 million $0.51 81.86

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

Profitability

This table compares Elastic and QAD’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Elastic N/A N/A N/A
QAD 1.78% 4.83% 2.13%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Elastic and QAD, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Elastic 0 7 6 0 2.46
QAD 0 0 2 0 3.00

Elastic currently has a consensus target price of $93.92, indicating a potential upside of 19.78%. QAD has a consensus target price of $53.50, indicating a potential upside of 28.14%. Given QAD’s stronger consensus rating and higher possible upside, analysts plainly believe QAD is more favorable than Elastic.

Dividends

QAD pays an annual dividend of $0.29 per share and has a dividend yield of 0.7%. Elastic does not pay a dividend. QAD pays out 56.9% of its earnings in the form of a dividend.

Summary

QAD beats Elastic on 11 of the 15 factors compared between the two stocks.

Elastic Company Profile

Elastic N.V. develops and delivers technology that enables users to search structured and unstructured data for a range of consumer and enterprise applications. It primarily provides Elastic Stack, a set of software products that ingest and store data from various sources and formats, as well as performs search, analysis, and visualization. Its Elastic Stack comprises products, such as Elasticsearch, a distributed, real-time search and analytics engine, and data store for various types of data, including textual, numerical, geospatial, structured, and unstructured; Kibana, a user interface, management, and configuration interface for the Elastic Stack; Beats, a single-purpose data shippers for sending data from edge machines to Elasticsearch or Logstash; and Logstash, a data processing pipeline for ingesting data into Elasticsearch or other storage systems. The company also offers software solutions on the Elastic Stack that address cases, including app search, site search, enterprise search, logging, metrics, application performance monitoring, business analytics, and security analytics. Its products are used by individual developers and organizations of a range of industries. The company was founded in 2012 and is headquartered in Mountain View, California.

QAD Company Profile

QAD Inc. provides enterprise software solutions for manufacturing companies in the automotive, life sciences, consumer products, food and beverage, high technology, and industrial products industries worldwide. The company offers QAD Enterprise Applications, an integrated suite of software applications, which support the core business processes. Its QAD Enterprise Applications include software solutions, such as QAD Financials to manage and control finance and accounting processes; QAD Customer Management for manufacturers to acquire new customers; QAD Manufacturing, which supports manufacturing business processes; QAD Automation Solutions that improve manufacturers' material transaction processing; QAD Demand and Supply Chain Planning that fulfills materials planning and logistics requirements; QAD Supply Chain Execution that offers tools to support inventory and warehouse management; and QAD Transportation Management to manage and optimize outside carriers for shipments. The company's QAD Enterprise Applications also comprise suites, such as QAD Service and Support that handles service calls, manages service queues, and organizes mobile field resources; QAD Enterprise Asset Management to manage, maintain, and install capital equipment; Action Centers with Embedded Analytics; and QAD Analytics that provides data to measure performance. It also offers QAD Enterprise Quality Management that provides quality management and regulatory compliance solutions; QAD Interoperability, which integrates QAD Enterprise Applications with other non-QAD core business applications; and QAD Internationalization, which supports companies that manufacture and distribute their products worldwide. In addition, it provides customer support, product updates, maintenance, and professional services. The company markets its products through direct and indirect sales channels; and distributors and sales agents. QAD Inc. was founded in 1979 and is headquartered in Santa Barbara, California.

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