Sourcefire (NASDAQ: FIRE) and Cadence Design Systems (NASDAQ:CDNS) are both technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.
Institutional and Insider Ownership
84.6% of Cadence Design Systems shares are held by institutional investors. 2.6% of Cadence Design Systems 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.
This table compares Sourcefire and Cadence Design Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cadence Design Systems||13.45%||29.00%||11.60%|
Earnings and Valuation
This table compares Sourcefire and Cadence Design Systems’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cadence Design Systems||$1.82 billion||6.78||$203.08 million||$0.93||46.86|
Cadence Design Systems has higher revenue and earnings than Sourcefire.
This is a breakdown of recent ratings and target prices for Sourcefire and Cadence Design Systems, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cadence Design Systems||0||3||3||0||2.50|
Sourcefire presently has a consensus target price of $2.50, suggesting a potential downside of 23.90%. Cadence Design Systems has a consensus target price of $43.33, suggesting a potential downside of 0.57%. Given Cadence Design Systems’ higher probable upside, analysts clearly believe Cadence Design Systems is more favorable than Sourcefire.
Cadence Design Systems beats Sourcefire on 8 of the 8 factors compared between the two stocks.
Sourcefire, Inc. (Sourcefire) is engaged in the business of delivering intelligent cybersecurity technologies. The Company provides a portfolio of solutions that enables commercial enterprises and government agencies worldwide to manage and minimize cybersecurity risks. Sourcefire provides customers with Agile Security that consists of hardware with embedded software, software and cloud-based solutions. It sells its solutions to a customer base that includes Global 2000 companies, global enterprises, the United States and international government agencies, and small and mid-size businesses. During the year ended December 31, 2012, it generated approximately 67% of the Company’s revenue from customers in the United States, and 33% of the Company’s revenue from customers outside of the United States. As of December 31, 2012, its product revenue and services revenue represented 61% and 39% of its total revenue, respectively.
About Cadence Design Systems
Cadence Design Systems, Inc. provides solutions that enable its customers to design electronic products. The Company’s product categories include Functional Verification, Digital integrated circuits (IC) Design and Signoff, Custom IC Design and Verification, System Interconnect and Analysis, and intellectual property (IP). Functional verification products are used to verify that the circuitry or the software designed will perform as intended. Digital IC design offerings are used to create representations of a digital circuit or an IC that can be verified for correctness prior to implementation. Custom IC design and verification offerings are used to create schematic and physical representations of circuits down to the transistor level for analog and memory designs. System Interconnect and Analysis offerings are used to develop printed circuit boards and IC packages. Design IP offerings consist of functional blocks, which customers integrate into their ICs for the development process.
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