Financial Contrast: EPAM Systems (NYSE:EPAM) & RealNetworks (RNWK)

RealNetworks (NASDAQ: RNWK) and EPAM Systems (NYSE:EPAM) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.

Volatility and Risk

RealNetworks has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, EPAM Systems has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for RealNetworks and EPAM Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RealNetworks 0 0 1 0 3.00
EPAM Systems 0 2 13 0 2.87

RealNetworks currently has a consensus target price of $6.50, indicating a potential upside of 81.06%. EPAM Systems has a consensus target price of $124.80, indicating a potential downside of 0.55%. Given RealNetworks’ stronger consensus rating and higher probable upside, equities analysts plainly believe RealNetworks is more favorable than EPAM Systems.

Valuation & Earnings

This table compares RealNetworks and EPAM Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RealNetworks $78.72 million 1.71 -$16.30 million N/A N/A
EPAM Systems $1.45 billion 4.62 $72.76 million $2.85 44.03

EPAM Systems has higher revenue and earnings than RealNetworks.

Profitability

This table compares RealNetworks and EPAM Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RealNetworks -11.87% -21.20% -14.36%
EPAM Systems 7.33% 17.45% 14.17%

Insider and Institutional Ownership

53.7% of RealNetworks shares are owned by institutional investors. Comparatively, 90.7% of EPAM Systems shares are owned by institutional investors. 37.9% of RealNetworks shares are owned by insiders. Comparatively, 5.3% of EPAM Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

EPAM Systems beats RealNetworks on 9 of the 12 factors compared between the two stocks.

RealNetworks Company Profile

RealNetworks, Inc. provides network-delivered digital media applications and services to manage, play, and share digital media. Its Consumer Media segment offers RealPlayer media player software, which enables consumers to discover, play, download, manage and edit digital video, stream audio and video, download and save photos and videos from the Web, transfer and share content on social networks, and edit their own photo and video content. This segment also licenses its technology to electronic equipment, microchip, and integrated circuit manufacturers. The company's Mobile Services segment provides digital media services to mobile and online service providers as software as a service offerings, which include RealTimes, a photo and video sharing platform, offers to wireless carriers for integration in their hosted cloud solutions; Kontxt, a text message management, anti-spam, and classification product; ringback tone that enables callers to hear subscriber-selected music or messages instead of the traditional electronic ringing; intercarrier messaging services; and business intelligence, and subscriber management and billing for the carriers. Its Games segment develops, publishes, and distributes casual games, including time-management, board, card, puzzle, word, and hidden-object games. It offers its casual games through mobile devices, digital downloads, and subscription play. The company also develops and markets software products and services that enable the creation, distribution, and consumption of digital media, including audio and video. The company provides its products and services through direct and indirect channels comprising public relations, trade shows, events, and speaking opportunities; online channels; third party distribution partners; and third-party distribution channels, such as application storefronts, search engines, online portals, and content publishers. RealNetworks, Inc. was founded in 1994 and is headquartered in Seattle, Washington.

EPAM Systems Company Profile

EPAM Systems, Inc. provides software product development and digital platform engineering services primarily in North America, Europe, Asia, and Australia. It offers software product development services, including product research, customer experience design, prototyping, program management, component design and integration, lifecycle software testing, product deployment, end-user customization, performance tuning, product support and maintenance, managed services, and porting and cross-platform migration. The company provides custom application development services, such as business and technical requirement analysis, user experience design, solution architecture creation and validation, development, component design and integration, quality assurance and testing, deployment, performance tuning, support and maintenance, legacy applications re-engineering/refactoring, porting and cross-platform migration, and documentation. It also offers application testing services, including software application testing, testing for enterprise IT, and consulting services; application maintenance and support services, such as incident management, fault investigation diagnosis, work-around provision, application bug fixes, release management, enhancements, and third-party maintenance; and infrastructure management services comprising application, database, network, server, storage, and systems operations management, as well as incident notification and resolutions. In addition, it provides enterprise information management services. It serves customers in financial service, travel and consumer, software, hi-tech, media and entertainment, and life sciences and healthcare industries. The company was founded in 1993 and is headquartered in Newtown, Pennsylvania.

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