Head-To-Head Analysis: SendGrid (NYSE:SEND) vs. Square (NYSE:SQ)

SendGrid (NYSE:SEND) and Square (NYSE:SQ) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.

Risk and Volatility

SendGrid has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, Square has a beta of 3.31, meaning that its share price is 231% more volatile than the S&P 500.

Institutional & Insider Ownership

83.9% of SendGrid shares are held by institutional investors. Comparatively, 52.6% of Square shares are held by institutional investors. 30.2% of SendGrid shares are held by company insiders. Comparatively, 21.8% of Square shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for SendGrid and Square, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SendGrid 0 1 2 0 2.67
Square 3 12 18 0 2.45

SendGrid currently has a consensus target price of $42.33, indicating a potential downside of 21.72%. Square has a consensus target price of $84.69, indicating a potential upside of 36.03%. Given Square’s higher possible upside, analysts plainly believe Square is more favorable than SendGrid.

Profitability

This table compares SendGrid and Square’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SendGrid -4.03% -0.86% -0.70%
Square -1.35% 2.65% 0.74%

Earnings and Valuation

This table compares SendGrid and Square’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SendGrid $111.89 million 23.04 -$6.25 million ($0.19) -284.63
Square $3.30 billion 7.98 -$38.45 million $0.02 3,113.00

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

Summary

Square beats SendGrid on 9 of the 14 factors compared between the two stocks.

About SendGrid

SendGrid, Inc. operates as a digital communication platform in the United States and internationally. Its cloud-based platform provides various tools to the businesses, including developers and marketers to reach their customers using an email. The company offers services, such as email application programming interface (API), which allow developers to use its API in their preferred development framework and to use its platform to add email functionality to their applications; marketing campaigns that allow marketers to upload and manage customer contact lists, create and test email templates, and execute and analyze email campaigns to engage customers; and expert services to help businesses optimize their email delivery. The company was founded in 2009 and is based in Denver, Colorado.

About Square

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions. It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts EMV® chip cards and Near Field Communication payments; Chip card reader, which accepts EMV® chip cards and enables swiped transactions of magnetic stripe cards; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions. The company also provides Square Point of Sale software; Cash App, which provides access to the financial system, allowing customers to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup and delivery, to their customers; and Square Capital that facilitates loans to sellers based on real-time payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.

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