Analyzing Freshworks (FRSH) & The Competition

Freshworks (NASDAQ:FRSH) is one of 953 public companies in the “Software” industry, but how does it weigh in compared to its competitors? We will compare Freshworks to similar businesses based on the strength of its dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Profitability

This table compares Freshworks and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freshworks	22.28%	8.01%	5.00%
Freshworks Competitors	-612.41%	21.13%	-8.86%

Volatility and Risk

Freshworks has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Freshworks’ competitors have a beta of 1.34, meaning that their average stock price is 34% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Freshworks and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freshworks	0	8	8	1	2.59
Freshworks Competitors	5734	21488	44819	1493	2.57

Freshworks currently has a consensus target price of $15.92, suggesting a potential upside of 25.38%. As a group, “Software” companies have a potential upside of 28.46%. Given Freshworks’ competitors higher possible upside, analysts clearly believe Freshworks has less favorable growth aspects than its competitors.

Institutional and Insider Ownership

75.6% of Freshworks shares are owned by institutional investors. Comparatively, 41.8% of shares of all “Software” companies are owned by institutional investors. 8.5% of Freshworks shares are owned by company insiders. Comparatively, 19.9% of shares of all “Software” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Freshworks and its competitors top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Freshworks	$838.81 million	$183.72 million	19.84
Freshworks Competitors	$1.90 billion	$386.80 million	106.83

Freshworks’ competitors have higher revenue and earnings than Freshworks. Freshworks is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

Freshworks competitors beat Freshworks on 8 of the 13 factors compared.

Freshworks Company Profile

Freshworks Inc., a software development company, provides software-as-a-service products worldwide. It offers Freshworks Customer Service Suite, which provides automated, personalized self-service on various channels, including web, chat, mobile messaging, email, and social; Freshdesk, a ticketing-centric customer service solution; Freshsuccess, a customer success solution; and Freshchat that provides agents with a modern conversational experience to proactively engage customers across digital messaging channels. The company also provides Freshsales, an advanced and user-friendly sales automation solution; Freshmarketer, a marketing automation solution for businesses to redefine their marketing strategies; Freshsales Suite, which offers businesses a unified platform that facilitates cohesive engagement and detailed tracking of customers throughout their entire buying journey; Freshservice that offers virtual agents to help employees resolve issues, make requests, and answer questions without contacting the service desk; and Freshservice for Business Teams, which provides a unified employee service experience while ensuring the secure separation of departmental data. In addition, it offers Freshping to monitor website’s availability and get multichannel alerts if the website goes down; Freshstatus, which allows businesses to create a custom branded website status page for internal or external viewing to communicate website uptime and availability; and Freshsurvey to measure net promoter scores and other satisfaction metrics directly within Freshworks products. The company was formerly known as Freshdesk Inc. and changed its name to Freshworks Inc. in June 2017. Freshworks Inc. was incorporated in 2010 and is headquartered in San Mateo, California.