Contrasting Zendesk (NYSE:ZEN) and StoneCo (NYSE:STNE)

Zendesk (NYSE:ZEN) and StoneCo (NASDAQ:STNE) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.

Insider & Institutional Ownership

97.5% of Zendesk shares are held by institutional investors. Comparatively, 37.2% of StoneCo shares are held by institutional investors. 4.6% of Zendesk shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Zendesk and StoneCo’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zendesk $598.75 million 17.13 -$131.08 million ($0.95) -98.55
StoneCo $414.74 million 22.59 $91.43 million $0.33 102.48

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Zendesk and StoneCo, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zendesk 0 4 15 0 2.79
StoneCo 1 3 4 0 2.38

Zendesk currently has a consensus price target of $91.83, indicating a potential downside of 1.92%. StoneCo has a consensus price target of $33.00, indicating a potential downside of 2.42%. Given Zendesk’s stronger consensus rating and higher probable upside, equities analysts clearly believe Zendesk is more favorable than StoneCo.

Profitability

This table compares Zendesk and StoneCo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zendesk -22.52% -25.37% -8.39%
StoneCo N/A N/A N/A

Summary

StoneCo beats Zendesk on 7 of the 13 factors compared between the two stocks.

About Zendesk

Zendesk, Inc., a software development company, provides SaaS products for organizations. Its flagship product is Zendesk Support, a system for tracking, prioritizing, and solving customer support tickets across various channels. The company also offers Zendesk Chat, a live chat software to connect with customers on Websites, applications, and mobile devices; Zendesk Talk, a cloud-based call center software; Zendesk Guide, a knowledge base that powers customer self-service and support agent productivity; Zendesk Sell, a sales force automation software to enhance productivity, processes, and pipeline visibility for sales teams; Zendesk Connect that manages customer communication across channels; and Zendesk Explore, which provides analytics for businesses to measure and enhance the customer experience. In addition, it provides Zendesk Sunshine, a customer relationship management platform; Zendesk Embeddables, which allow developers to embed support, chat, and guide experiences on the Web and within mobile applications; and Zendesk application platform interfaces and Apps. The company has operations in North America, Latin America, Europe, the Middle East, Africa, Australia, Asia, and South America. Zendesk, Inc. was founded in 2007 and is headquartered in San Francisco, California.

About StoneCo

StoneCo Ltd. engages in the provision of financial technology solutions. It caters to merchants and partners that conduct electronic commerce across in-store, online, and mobile channels. It offers cloud-based technology platform, electronic payments, and automation of business processes at the point-of-sale. The company was founded on March 11, 2014 and is headquartered in São Paulo, Brazil.

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