New Relic (NYSE:NEWR) & Digimarc (DMRC) Critical Analysis

Digimarc (NASDAQ: DMRC) and New Relic (NYSE:NEWR) are both industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Institutional and Insider Ownership

56.3% of Digimarc shares are held by institutional investors. Comparatively, 76.5% of New Relic shares are held by institutional investors. 7.5% of Digimarc shares are held by insiders. Comparatively, 23.1% of New Relic shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Digimarc and New Relic’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digimarc $21.79 million 20.28 -$21.67 million ($2.25) -17.33
New Relic $263.48 million 12.62 -$61.07 million ($1.12) -53.92

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

Analyst Ratings

This is a summary of current ratings and target prices for Digimarc and New Relic, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digimarc 0 1 3 0 2.75
New Relic 0 4 9 0 2.69

Digimarc presently has a consensus price target of $45.33, indicating a potential upside of 16.24%. New Relic has a consensus price target of $55.33, indicating a potential downside of 8.37%. Given Digimarc’s stronger consensus rating and higher probable upside, equities analysts clearly believe Digimarc is more favorable than New Relic.

Profitability

This table compares Digimarc and New Relic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digimarc -90.69% -30.98% -29.02%
New Relic -19.43% -29.19% -16.09%

Volatility & Risk

Digimarc has a beta of -1.19, meaning that its share price is 219% less volatile than the S&P 500. Comparatively, New Relic has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Summary

New Relic beats Digimarc on 9 of the 13 factors compared between the two stocks.

Digimarc Company Profile

Digimarc Corporation (Digimarc) enables governments and enterprises to give digital identities to media and objects that computers can sense and recognize. The Company’s Digimarc Discover, Digimarc Barcode and Intuitive Computing Platform are designed to optimize the identification of consumer brand impressions, facilitating mobile-centric shopping. The Company operates through media management solutions segment. The Company’s platform includes means to embed Digimarc Barcodes, invisible and inaudible barcode-like information that is recognizable by smartphones, industrial scanners, and other computer interfaces into various forms of media content, including consumer product packaging. Its Digimarc Barcodes has a range of applications, including facilitating scanning of products at retail checkout, as well as engagement with smartphone-equipped consumers. The Digimarc Barcode allows automatic identification of media without visible computer codes, such as traditional barcodes.

New Relic Company Profile

New Relic, Inc. (New Relic) is a provider of enterprise software. The Company’s cloud-based platform and range of products enable organizations to collect, store and analyze software data in real time. The Company’s New Relic Software Analytics Cloud consists of an integrated suite of products, a data database and an open platform. New Relic offers an integrated suite of products, namely, New Relic APM, for application performance management; New Relic Mobile, for mobile application performance management; New Relic Servers, for server monitoring for cloud and data centers; New Relic Browser, for end user experience monitoring and performance monitoring; New Relic Synthetics, for software testing through simulated usage; New Relic Plugins, plugins to extend its functionality into other applications; New Relic Alerts, for policy management and delivering alerts across entire suite of products, and New Relic Insights, for real-time big data analytics for business managers.

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