Critical Contrast: 2U (TWOU) vs. MuleSoft (MULE)

2U (NASDAQ: TWOU) and MuleSoft (NYSE:MULE) are both mid-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Profitability

This table compares 2U and MuleSoft’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
2U -13.00% -11.12% -8.61%
MuleSoft -26.98% -32.10% -17.82%

Analyst Ratings

This is a summary of recent ratings and target prices for 2U and MuleSoft, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
2U 0 1 10 0 2.91
MuleSoft 0 8 3 0 2.27

2U currently has a consensus target price of $90.18, indicating a potential downside of 6.78%. MuleSoft has a consensus target price of $33.33, indicating a potential downside of 25.21%. Given 2U’s stronger consensus rating and higher possible upside, research analysts clearly believe 2U is more favorable than MuleSoft.

Valuation and Earnings

This table compares 2U and MuleSoft’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
2U $286.75 million 19.14 -$29.42 million ($0.54) -179.15
MuleSoft $296.46 million 19.77 -$79.98 million ($0.67) -66.52

2U has higher earnings, but lower revenue than MuleSoft. 2U is trading at a lower price-to-earnings ratio than MuleSoft, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

2U has a beta of -0.03, suggesting that its stock price is 103% less volatile than the S&P 500. Comparatively, MuleSoft has a beta of -3.73, suggesting that its stock price is 473% less volatile than the S&P 500.

Institutional & Insider Ownership

98.3% of 2U shares are held by institutional investors. Comparatively, 51.1% of MuleSoft shares are held by institutional investors. 5.0% of 2U shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

2U beats MuleSoft on 11 of the 14 factors compared between the two stocks.

2U Company Profile

2U, Inc. operates as an education technology company in the United States, Hong Kong, South Africa, and the United Kingdom. The company operates through two segments, Graduate Program Segment and Short Course Segment. It offers front-end technology and services, including online learning platform, student and faculty and immersion support, accessibility, admissions application advising, in-program student field placements, and faculty recruiting. The company provides back-end technology and services comprising graduate program launch and operations applications, university systems integration applications, content management system, admission application processing portal, customer relationship management, content development, student acquisition, and state authorization services. The company was formerly known as 2Tor Inc. and changed its name to 2U, Inc. in October 2012. 2U, Inc. was founded in 2008 and is headquartered in Lanham, Maryland.

MuleSoft Company Profile

MuleSoft, Inc. provides Anypoint Platform that allows customers to connect their applications, data, and devices in the United States, the United Kingdom, and internationally. Its platform also enables a self-serve infrastructure through discoverable building blocks or nodes that can be used and reused to compose applications. Its customers use these building blocks to connect their SaaS applications, on-premises applications, cloud deployments, mobile devices, and data into an application network. MuleSoft, Inc. has a strategic alliance with IQVIA. The company was formerly known as MuleSource, Inc. and changed its name to MuleSoft, Inc. in August 2009. MuleSoft, Inc. was incorporated in 2006 and is headquartered in San Francisco, California.

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