RingCentral (NYSE:RNG) vs. Salesforce (NYSE:CRM) Financial Contrast

Salesforce (NYSE:CRM) and RingCentral (NYSE:RNG) are both technology companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitability.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Salesforce and RingCentral, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salesforce	3	13	32	4	2.71
RingCentral	0	8	6	0	2.43

Salesforce currently has a consensus target price of $278.98, indicating a potential upside of 30.39%. RingCentral has a consensus target price of $93.92, indicating a potential upside of 30.43%. Given RingCentral’s higher possible upside, analysts clearly believe RingCentral is more favorable than Salesforce.

Volatility and Risk

Salesforce has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, RingCentral has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.

Profitability

This table compares Salesforce and RingCentral’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Salesforce	21.99%	24.90%	11.27%
RingCentral	25.27%	-50.15%	14.82%

Insider and Institutional Ownership

80.4% of Salesforce shares are held by institutional investors. Comparatively, 98.6% of RingCentral shares are held by institutional investors. 3.5% of Salesforce shares are held by company insiders. Comparatively, 7.3% of RingCentral shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Salesforce pays an annual dividend of $1.76 per share and has a dividend yield of 0.8%. RingCentral pays an annual dividend of $0.50 per share and has a dividend yield of 0.7%. Salesforce pays out 16.0% of its earnings in the form of a dividend. RingCentral pays out 6.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Salesforce has increased its dividend for 1 consecutive years. Salesforce is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Salesforce and RingCentral”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salesforce	$41.52 billion	4.24	$7.46 billion	$10.97	19.50
RingCentral	$2.52 billion	2.42	$43.39 million	$7.56	9.53

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

Summary

Salesforce beats RingCentral on 12 of the 18 factors compared between the two stocks.

About Salesforce

Salesforce, Inc. provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. The company's service includes sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and artificial intelligence, and deliver quotes, contracts, and invoices; and service that enables companies to deliver trusted and highly personalized customer support at scale. In addition, its platform offering comprise a flexible platform that enables companies of various sizes, locations, and industries to build business workflow and apps with customer; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, an intelligent productivity platform. The company's marketing services enables companies to plan, personalize, automate, and optimize customer marketing journey, connecting interaction, and connected products; and commerce services, which empowers shopping experience across various customer touchpoint, such as mobile, web, social, and stores and provides click-to-code tools that offers customers to build and deploy solutions. Further, its analytics offering includes Tableau, an end-to-end analytics solution for range of enterprise use cases and intelligent analytics with AI models, spot trends, predict outcomes, creates summaries, timely recommendations, and take action from any device; and integration service including MuleSoft, which provides building blocks to deliver end-to-end and connected experiences. Additionally, the company provides data cloud, a hyperscale data engine native to Salesforce; vertical services to meet the needs of customers in industries, such as financial services, healthcare and life sciences, manufacturing and automotive and government; and offers salesforce starter for small and medium-sized businesses. Salesforce, Inc. was incorporated in 1999 and is headquartered in San Francisco, California.

About RingCentral

RingCentral, Inc., together with its subsidiaries, provides cloud communications, video meetings, collaboration, and contact center software-as-a-service solutions worldwide. The company’s products include RingCentral Message Video Phone that provides a unified experience for communication and collaboration across multiple modes, including HD voice, video, SMS, messaging and collaboration, conferencing, online meetings, and fax; RingCentral Contact Center, a collaborative contact center solution that delivers AI-powered omnichannel and workforce engagement solutions with integrated RingCentral MVP; and RingCX, an AI-powered contact center that a native delivers omnichannel experience. It provides RingCentral Video, a video meeting service that includes the company’s RCV video and team messaging capabilities; offers video and audio conferencing, team messaging, file sharing, contact, task, and calendar management, as well as pre-meeting, in-meeting, and post-meeting capabilities. In addition, the company offers RingCentral Professional Services, which include consultation, UCaaS and CCaaS implementation, VoIP phone system adoption, configuring custom workflows, customer and user onboarding, ongoing support, advanced support, managed services, and more. It serves a range of industries, including financial services, education, healthcare, legal services, real estate, retail, technology, insurance, construction, hospitality, state and local government, and others. It sells its products to enterprise customers, as well as small and medium-sized businesses through resellers and distributors, partners, and global service providers. RingCentral, Inc. was incorporated in 1999 and is headquartered in Belmont, California.