Salesforce.com, inc. (NYSE:CRM) and Proofpoint, Inc. (NYSE:PFPT) are both Technology companies that recently hit new low. Naturally, this has caught the attention of the investment community. But which is the better investment? To answer this question, we will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation.
Salesforce.com, inc. (NYSE:CRM) operates in the Application Software segment of the Technology sector. The company has grown sales at a 29.90% annual rate over the past five years, putting it in the high growth category. CRM has a net profit margin of 0.10% and is more profitable than the average company in the Application Software industry. In terms of efficiency, CRM has an asset turnover ratio of 0.57. This figure represents the amount of revenue a company generates per dollar of assets. CRM’s financial leverage ratio is 0.98, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 0.10%, which is worse than the Application Software industry average ROE.
Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 0.02. Company trades at a P/E ratio of 13372.50 , and is more expensive than the average stock in the Application Software industry. The average investment recommendation for CRM, taken from a group of Wall Street Analysts, is 1.80, or a buy.
Over the past three months, Salesforce.com, inc. insiders have been net buyers, dumping a net of -772,080 shares. This implies that insiders have been feeling relatively bearish about the outlook for CRM. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. CRM has a beta of 1.29 and therefore an above average level of market volatility.
Proofpoint, Inc. (NASDAQ:PFPT) operates in the Application Software segment of the Technology sector. PFPT has increased sales at a 35.60% CAGR over the past five years, and is considered a high growth stock. The company has a net profit margin of -18.00% and is less profitable than the average Application Software player. PFPT’s asset turnover ratio is 0.57 and the company has financial leverage of 25.88. PFPT’s return on equity of -249.80% is worse than the Application Software industry average.
The average analyst recommendation for PFPT is 1.80, or a buy.
Proofpoint, Inc. insiders have sold a net of -204,166 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, PFPT’s beta of 1.39 indicates that the stock has an above average level of market risk.
PFPT has the better fundamentals, scoring higher on growth metrics.