AgroFresh Solutions (NASDAQ: AGFS) and NetScout Systems (NASDAQ:NTCT) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

71.7% of AgroFresh Solutions shares are held by institutional investors. 15.2% of AgroFresh Solutions shares are held by company insiders. Comparatively, 3.5% of NetScout Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for AgroFresh Solutions and NetScout Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AgroFresh Solutions 0 1 0 0 2.00
NetScout Systems 0 2 1 0 2.33

AgroFresh Solutions currently has a consensus target price of $8.00, indicating a potential upside of 12.52%. NetScout Systems has a consensus target price of $39.50, indicating a potential upside of 21.35%. Given NetScout Systems’ stronger consensus rating and higher probable upside, analysts clearly believe NetScout Systems is more favorable than AgroFresh Solutions.

Profitability

This table compares AgroFresh Solutions and NetScout Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AgroFresh Solutions -43.81% -0.22% -0.08%
NetScout Systems 1.60% 5.53% 3.77%

Earnings & Valuation

This table compares AgroFresh Solutions and NetScout Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AgroFresh Solutions $161.99 million 2.21 $67.33 million ($1.44) -4.94
NetScout Systems $1.12 billion 2.60 $201.03 million $0.19 171.32

NetScout Systems has higher revenue and earnings than AgroFresh Solutions. AgroFresh Solutions is trading at a lower price-to-earnings ratio than NetScout Systems, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

AgroFresh Solutions has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, NetScout Systems has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500.

Summary

NetScout Systems beats AgroFresh Solutions on 11 of the 13 factors compared between the two stocks.

About AgroFresh Solutions

AgroFresh Solutions, Inc., formerly Boulevard Acquisition Corp., is a developer of agricultural technologies that preserve the freshness and value of fresh produce, including apples, pears, kiwifruit, avocados and bananas, as well as flowers. The Company’s principal product, The SmartFresh Quality System (SmartFresh), regulates the post-harvest ripening effects of ethylene, the naturally occurring plant hormone that triggers ripening in certain fruits and vegetables, through technology. SmartFresh is naturally biodegradable and leaves no detectable residue, which has significant consumer appeal. SmartFresh allows growers and packers to deliver just harvested freshness on a year-round basis. An integral part of the SmartFresh sales process is the AgroFresh Whole Product offering, which is a direct service model that provides customers with on-site applications of SmartFresh at their storage facilities combined with advisory services. The Company operates in approximately 40 countries.

About NetScout Systems

NetScout Systems, Inc. (NetScout) provides operational intelligence and performance analytics for service assurance and cyber security solutions. The Company’s solutions are used in various service provider, enterprise and government networks. Its nGenius and Infinistream technologies, along with certain product lines from the acquired businesses, enable information technology (IT) organizations to manage service delivery quality, and identify and address business service performance issues and security threats. The Company’s manufacturing operations consist of final product assembly, configuration and testing. The Company’s nGeniusONE Service Assurance Solution is used to support NetScout’s enterprise, service provider and government customers. The Company’s Intelligent Data Sources, marketed under the Infinistream brand, provide collection and analysis of high-volume packet-flow data from across the network that is displayed through the nGeniusONE Service Assurance Solution.

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