RealNetworks (NASDAQ: RNWK) and Exa Corporation (NASDAQ:EXA) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, institutional ownership, risk and valuation.

Insider and Institutional Ownership

51.7% of RealNetworks shares are held by institutional investors. Comparatively, 76.0% of Exa Corporation shares are held by institutional investors. 37.9% of RealNetworks shares are held by insiders. Comparatively, 11.5% of Exa Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for RealNetworks and Exa Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RealNetworks 0 0 1 0 3.00
Exa Corporation 0 1 3 0 2.75

RealNetworks currently has a consensus target price of $6.50, suggesting a potential upside of 40.69%. Exa Corporation has a consensus target price of $16.50, suggesting a potential upside of 3.25%. Given RealNetworks’ stronger consensus rating and higher possible upside, research analysts plainly believe RealNetworks is more favorable than Exa Corporation.

Risk and Volatility

RealNetworks has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500. Comparatively, Exa Corporation has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Profitability

This table compares RealNetworks and Exa Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RealNetworks -20.48% -36.41% -24.73%
Exa Corporation -6.46% -25.19% -7.40%

Valuation & Earnings

This table compares RealNetworks and Exa Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RealNetworks $126.19 million 1.36 -$17.23 million ($0.69) -6.70
Exa Corporation $72.69 million 3.30 $1.48 million ($0.32) -49.94

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

Summary

Exa Corporation beats RealNetworks on 8 of the 13 factors compared between the two stocks.

RealNetworks Company Profile

RealNetworks, Inc. creates applications and services that enable to connect with digital media. The Company connects consumers with their digital media directly and through partners, focusing on supporting various network, devices, media types and social networks. It operates through three segments: Consumer Media, Mobile Services and Games. Within its Consumer Media business, its RealPlayer media player software includes features and services that enable 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. The Mobile Services segment consists of digital media services it provides to mobile and online service providers as software as a service offerings. It develops, publishes, licenses and distributes casual games.

Exa Corporation Company Profile

Exa Corporation develops, sells and supports simulation software and services that manufacturers use in design and engineering processes. The Company focuses primarily on the ground transportation market, including manufacturers in the passenger vehicle, highway truck, off-highway vehicle and train markets, as well as their suppliers. Its product, PowerFLOW, is a software solution for simulating fluid flow problems, including aerodynamics, thermal management and aeroacoustics, or wind noise. PowerFLOW uses its Digital Physics technology that enables it to predict fluid flows. PowerFLOW directly simulates unpredictable turbulent scales. The PowerFLOW software suite includes the simulation engine and grid generation engine, along with pre- and post-processing software products. The software is delivered in client/server architecture, or through its cloud-based offering, ExaCLOUD. With the ExaCLOUD solution, various client features and functions are accessed through a Web browser.

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