Analyzing West Corporation (WSTC) and Ooma (OOMA)

West Corporation (NASDAQ: WSTC) and Ooma (NYSE:OOMA) are both small-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, profitability, earnings, analyst recommendations and dividends.

Insider & Institutional Ownership

67.4% of West Corporation shares are owned by institutional investors. Comparatively, 74.0% of Ooma shares are owned by institutional investors. 4.6% of West Corporation shares are owned by insiders. Comparatively, 11.4% of Ooma shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares West Corporation and Ooma’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
West Corporation $2.29 billion 0.85 $636.33 million $2.51 9.31
Ooma $110.34 million 1.66 -$10.66 million ($0.71) -13.94

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

Dividends

West Corporation pays an annual dividend of $0.45 per share and has a dividend yield of 1.9%. Ooma does not pay a dividend. West Corporation pays out 17.9% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for West Corporation and Ooma, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
West Corporation 0 5 0 0 2.00
Ooma 1 2 2 0 2.20

West Corporation presently has a consensus price target of $24.50, suggesting a potential upside of 4.84%. Ooma has a consensus price target of $12.00, suggesting a potential upside of 21.21%. Given Ooma’s stronger consensus rating and higher probable upside, analysts plainly believe Ooma is more favorable than West Corporation.

Profitability

This table compares West Corporation and Ooma’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
West Corporation 9.39% -59.08% 7.03%
Ooma -11.48% -30.96% -16.79%

Volatility & Risk

West Corporation has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, Ooma has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500.

Summary

Ooma beats West Corporation on 8 of the 15 factors compared between the two stocks.

West Corporation Company Profile

West Corporation is a provider of communication and network infrastructure services. The Company helps its clients communicate, collaborate and connect with their audiences through a portfolio of solutions that include unified communications services, safety services, and interactive services, such as automated notifications, specialized agent services and telecom services. The Company’s segments include Unified Communications Services, which includes collaboration services, Unified Communications as a Service (UCaaS) and telecom services; Safety Services, which includes carrier services, government solutions and advanced services; Interactive Services, including outbound (proactive notifications-voice, text/short messaging service (SMS) and chat), inbound speech solutions (interactive voice response or IVR), Web, mobile and professional services, and Specialized Agent Services, which includes healthcare advocacy services, cost management services and revenue generation.

Ooma Company Profile

Ooma, Inc. is a United States-based company, which offers Ooma, a communications platform for small businesses and consumers. Ooma serves as a communications hub, which offers cloud-based telephony, Internet security, home monitoring and other connected services. Ooma combines PureVoice high definition (HD) call quality features with mobile applications anytime, anywhere calling. Ooma is a full router capable of prioritizing voice data and directing traffic to ensure reliable phone service. Its enterprise-grade phone service built for small business includes features, such as calling features, including unlimited calling in United States and Canada, 911 service and toll-free numbers available; office features, including virtual receptionist, extension dialing and voicemail; mobility features, including call forwarding, voicemail forwarding and multi-ring, and one-touch Internet protocol (IP) phone features, including three way conference, transfer calls and call on hold.

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