Instructure (NYSE: INST) and Model N (NYSE:MODN) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Institutional & Insider Ownership

78.3% of Instructure shares are owned by institutional investors. Comparatively, 65.9% of Model N shares are owned by institutional investors. 12.8% of Instructure shares are owned by company insiders. Comparatively, 20.4% of Model N shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Instructure and Model N’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Instructure $133.71 million 7.50 -$47.35 million ($1.79) -19.05
Model N $124.07 million 3.47 -$29.98 million ($1.35) -10.96

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

Risk & Volatility

Instructure has a beta of 1.89, indicating that its stock price is 89% more volatile than the S&P 500. Comparatively, Model N has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500.

Profitability

This table compares Instructure and Model N’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Instructure -38.12% -827.22% -45.34%
Model N -30.85% -52.59% -20.77%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Instructure and Model N, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Instructure 0 0 6 1 3.14
Model N 0 2 4 0 2.67

Instructure currently has a consensus target price of $36.14, indicating a potential upside of 5.99%. Model N has a consensus target price of $13.20, indicating a potential downside of 10.81%. Given Instructure’s stronger consensus rating and higher probable upside, research analysts plainly believe Instructure is more favorable than Model N.

Summary

Instructure beats Model N on 8 of the 14 factors compared between the two stocks.

About Instructure

Instructure, Inc. provides cloud-based learning management platform for academic institutions and companies across the world. The Company operates in the cloud-based learning management systems segment. The Company builds its learning management applications, Canvas for the education market and Bridge for the corporate market, to enable its customers to develop, deliver and manage face-to-face and online learning experiences. The Company develops software that students, teachers and employees use to help achieve their education and learning goals. Its applications develop academic and corporate learning by providing a platform for instructors and learners, enabling frequent and open interactions, streamlining workflow, and allowing the creation and sharing of content. The Company’s platform runs on a cloud-based architecture that enables users to teach, learn and engage across a range of application environments, operating systems, devices and locations.

About Model N

Model N, Inc. is a provider of revenue management solutions for life science and technology companies. The Company’s solutions enable its customers to maximize revenues and reduce revenue compliance risk by transforming their revenue life cycle from a series of tactical, disjointed operations into a strategic end-to-end process. The Company’s solutions include Revenue Enterprise Cloud, Revenue Intelligence Cloud and Revvy Revenue Management. The Company provides solutions that span the organizational and operational boundaries of functions, such as sales, marketing and finance, and serve as a system of record for revenue management processes, including pricing, contracts, rebates, incentives and regulatory compliance. The Company’s application suites are designed to work with enterprise resource planning (ERP) and customer relationship management (CRM) applications. The Company also offers implementation services, managed services, strategic services and customer support.

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