eFuture (NASDAQ: EFUT) and Red Hat (NYSE:RHT) are both software – nec companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Insider & Institutional Ownership

1.6% of eFuture shares are owned by institutional investors. Comparatively, 93.6% of Red Hat shares are owned by institutional investors. 0.7% of Red Hat shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares eFuture and Red Hat’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
eFuture N/A N/A N/A N/A N/A
Red Hat $2.41 billion 8.95 $253.70 million $1.84 65.78

Red Hat has higher revenue and earnings than eFuture.

Analyst Ratings

This is a breakdown of current recommendations and price targets for eFuture and Red Hat, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
eFuture 0 0 0 0 N/A
Red Hat 1 8 22 0 2.68

Red Hat has a consensus target price of $125.31, indicating a potential upside of 3.53%. Given Red Hat’s higher possible upside, analysts plainly believe Red Hat is more favorable than eFuture.

Profitability

This table compares eFuture and Red Hat’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
eFuture -22.90% -20.16% -11.94%
Red Hat 12.14% 26.23% 7.66%

Summary

Red Hat beats eFuture on 8 of the 8 factors compared between the two stocks.

About eFuture

eFuture Holding Inc., formerly eFuture Information Technology Inc., is a holding company. The Company is a software and solution provider and a mobile business enabler to China’s retail and consumer goods industries. All of the Company’s operations are conducted through its Chinese subsidiary, eFuture (Beijing) Royalstone Information Technology Inc. (eFuture Beijing). The Company caters to manufacturers, distributors, resellers, logistics companies and retailers. Its software professional service includes delivery services, recurring maintenance services and offers support service system. The Company’s software solutions are specifically designed to optimize demand processes from factory to consumer, and to address supply chain management (SCM), business processes, decision support, inventory optimization, collaborative planning and forecasting requirements. Its Omni-channel solutions business includes a series of omni-channel cloud services. Its Omni-channel solutions offer myStore.

About Red Hat

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

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