Critical Review: GitLab (NASDAQ:GTLB) versus Rapid7 (NASDAQ:RPD)

GitLab (NASDAQ:GTLB) and Rapid7 (NASDAQ:RPD) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for GitLab and Rapid7, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GitLab	4	18	7	1	2.17
Rapid7	3	17	2	0	1.95

GitLab presently has a consensus price target of $37.08, suggesting a potential upside of 19.41%. Rapid7 has a consensus price target of $8.71, suggesting a potential upside of 3.94%. Given GitLab’s stronger consensus rating and higher possible upside, analysts plainly believe GitLab is more favorable than Rapid7.

Insider and Institutional Ownership

95.0% of GitLab shares are owned by institutional investors. Comparatively, 95.7% of Rapid7 shares are owned by institutional investors. 10.6% of GitLab shares are owned by insiders. Comparatively, 2.4% of Rapid7 shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares GitLab and Rapid7″s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GitLab	$955.22 million	5.53	-$55.96 million	($0.35)	-88.71
Rapid7	$859.79 million	0.65	$23.38 million	$0.35	23.94

Rapid7 has lower revenue, but higher earnings than GitLab. GitLab is trading at a lower price-to-earnings ratio than Rapid7, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

GitLab has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, Rapid7 has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Profitability

This table compares GitLab and Rapid7’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GitLab	-5.86%	-1.73%	-1.05%
Rapid7	2.61%	34.35%	2.78%

Summary

Rapid7 beats GitLab on 8 of the 15 factors compared between the two stocks.

About GitLab

GitLab Inc., through its subsidiaries, develops software for the software development lifecycle in the United States, Europe, and the Asia Pacific. It offers GitLab, a DevOps platform, which is a single application that leads to faster cycle time and allows visibility throughout and control over various stages of the DevOps lifecycle. The company helps organizations to plan, build, secure, and deploy software to drive business outcomes. It also provides related training and professional services. The company was formerly known as GitLab B.V. and changed its name to GitLab Inc. in July 2015. GitLab Inc. was founded in 2011 and is headquartered in San Francisco, California.

About Rapid7

Rapid7, Inc. provides cybersecurity solutions under the Rapid7, Nexpose, and Metasploit brand names. The company offers endpoint to cloud data collection and sharing applications, such as Rapid7 Insight Agent, a software-based agent that is used on assets across on-premises and cloud environments to centralize and monitor data on company's platform; Rapid7 Insight Network Sensor that analyzes raw end-to-end network traffic to increase visibility into user activity, pinpoint real threats, and investigations; Rapid7 Cloud Event Data Harvesting that offers visibility into changes made to cloud resources; and third-party integrations and ecosystem, as well as orchestration and automation solutions. It also offers various platforms, including Rapid7 managed threat complete consisting of managed detection response that delivers end-to-end threat detection and response, as well as offloads day-to-day vulnerability management operations. In addition, it provides Rapid7 threat complete consisting of InsightIDR, a security information and event management, and extended detection and response solution; and InsightVM, a vulnerability management solution that provides visibility across on-premise and remote endpoints for security teams to evaluate the business risks, and configurations, and share with their IT counterparts for remediation. Further, the company offers Rapid7 cloud risk complete, which includes InsightCloudSec, a cloud risk and compliance management solution; and InsightAppSec, a dynamic application security testing tool. It also provides professional services. It serves a range of industries, including business services, pharmaceuticals, technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, travel and transportation, government, online services, telecommunications, and professional services. The company was incorporated in 2000 and is headquartered in Boston, Massachusetts.