Twilio (NASDAQ: SPSC) and SPS Commerce (NASDAQ:SPSC) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, earnings, institutional ownership and profitability.

Valuation and Earnings

This table compares Twilio and SPS Commerce’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Twilio $399.02 million 19.54 -$63.70 million ($0.78) -102.55
SPS Commerce $220.57 million 7.70 -$2.44 million $0.42 231.36

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

Risk and Volatility

Twilio has a beta of -0.26, indicating that its share price is 126% less volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Twilio and SPS Commerce, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Twilio 0 1 16 0 2.94
SPS Commerce 0 0 7 0 3.00

Twilio presently has a consensus price target of $68.86, indicating a potential downside of 13.92%. SPS Commerce has a consensus price target of $83.83, indicating a potential downside of 13.73%. Given SPS Commerce’s stronger consensus rating and higher possible upside, analysts clearly believe SPS Commerce is more favorable than Twilio.

Insider and Institutional Ownership

57.6% of Twilio shares are owned by institutional investors. Comparatively, 95.1% of SPS Commerce shares are owned by institutional investors. 19.8% of Twilio shares are owned by company insiders. Comparatively, 2.8% of SPS Commerce shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Twilio and SPS Commerce’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Twilio -18.29% -21.41% -13.66%
SPS Commerce 0.61% 4.25% 3.56%

Summary

SPS Commerce beats Twilio on 9 of the 13 factors compared between the two stocks.

Twilio Company Profile

Twilio Inc. provides a cloud communications platform that enables developers to build, scale, and operate communications within software applications in the United States and internationally. The company's programmable communications cloud provides a set of application programming interfaces that enable developers to embed voice, messaging, and video capabilities into their applications. Twilio Inc. was founded in 2008 and is headquartered in San Francisco, California.

SPS Commerce Company Profile

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It provides solutions through the SPS Commerce platform, a cloud-based product suite that enhances the way retailers, suppliers, distributors, logistics firms, and other trading partners manage and fulfill orders, manage sell-through performance, and source new items. The company offers Trading Partner Fulfillment solution, which provides fulfillment automation and replaces or augments an organization's existing trading partner electronic communication infrastructure; Trading Partner Analytics solution that comprises data analytics applications to enhance visibility and analysis of customers supply chains; and Trading Partner Assortment solution to manage individual attributes associated with each item a retailer or supplier sells. It also provides Trading Partner Sourcing solution that enables retailers to source providers of new items, suppliers to connect with new retailers, and retailing community; Trading Partner Community Development solution, which offers communications programs that enables retailers, suppliers, and emerging providers of value-added products and services to establish trading partner relationships with new trading partners to expand their businesses; and Other Trading Partner Solutions, such as barcode labeling, planogram services, and scan and pack application that helps trading partners process information to streamline the picking and packaging process. The company sells its solutions primarily through retail sales professionals and supplier sales representatives to small- to mid-sized suppliers in the consumer packaged goods industry, as well as retailers, distributors, third-party logistics providers, and other trading partners. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

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