Critical Survey: Rapid7 (RPD) vs. Secureworks (SCWX)

Rapid7 (NASDAQ:RPD) and Secureworks (NASDAQ:SCWX) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, risk, dividends and profitability.

Insider and Institutional Ownership

85.1% of Rapid7 shares are held by institutional investors. Comparatively, 10.9% of Secureworks shares are held by institutional investors. 4.9% of Rapid7 shares are held by insiders. Comparatively, 87.5% of Secureworks shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Rapid7 and Secureworks’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rapid7 $244.09 million 10.76 -$55.54 million ($1.01) -53.94
Secureworks $518.71 million 2.85 -$39.10 million ($0.16) -113.81

Secureworks has higher revenue and earnings than Rapid7. Secureworks is trading at a lower price-to-earnings ratio than Rapid7, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Rapid7 has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Secureworks has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Profitability

This table compares Rapid7 and Secureworks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rapid7 -19.35% -46.34% -7.97%
Secureworks -7.54% -1.85% -1.27%

Analyst Ratings

This is a breakdown of current ratings for Rapid7 and Secureworks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rapid7 0 2 12 1 2.93
Secureworks 3 5 0 0 1.63

Rapid7 presently has a consensus price target of $54.43, indicating a potential downside of 0.09%. Secureworks has a consensus price target of $14.25, indicating a potential downside of 21.75%. Given Rapid7’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Rapid7 is more favorable than Secureworks.

Summary

Rapid7 beats Secureworks on 8 of the 15 factors compared between the two stocks.

Rapid7 Company Profile

Rapid7, Inc. provides analytics solutions for security and information (IT) operations. Its vulnerability management solutions include InsightVM and Nexpose, which enable customers to assess and remediate their overall exposure to cyber risk; InsightAppSec, an insight platform based solution; AppSpider, an application security testing solution; and Metasploit, a penetration testing software solution. The company's incident detection and response solutions comprise InsightIDR; Managed Detection and Response, an outsourced service; and incident response services that offer customers with access to security experts and experience. In addition, it provides Logentries for cyber security; InsightOps, which simplifies IT infrastructure monitoring and troubleshooting by centralizing data from customers' network into a secure location; and Komand software. Further, the company provides consulting services in the areas of cyber security maturity assessment, incident response program development, penetration testing, security program development, Virtual CISO, IoT security, and threat modeling services. It offers its products through a combination of perpetual and term software licenses, cloud-based subscriptions, and managed services. The company serves clients in technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government, and professional services industries through sales teams, and indirect channel partner relationships, as well as directly in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Rapid7, Inc. was incorporated in 2000 and is headquartered in Boston, Massachusetts.

Secureworks Company Profile

SecureWorks Corp., a cybersecurity company, provides an integrated suite of intelligence-driven information security solutions focused on protecting organizations worldwide. The company's solutions include managed security, threat intelligence, security and risk consulting, and incident response. Its solutions enable organizations to fortify their cyber defenses to prevent security breaches, detect malicious activity, respond to security breaches, and predict emerging threats. The company serves clients in a range of industries, including the financial services, manufacturing, technology, retail, insurance, utility, and healthcare sectors. As of February 1, 2019, it served approximately 4,700 customers in 52 countries. The company was formerly known as SecureWorks Holding Corporation and changed its name to SecureWorks Corp. in November 2015. The company was founded in 1999 and is headquartered in Atlanta, Georgia. SecureWorks Corp. is a subsidiary of Dell Inc.

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