Reviewing Q2 (NYSE:QTWO) and Paycom Software (NYSE:PAYC)

Q2 (NYSE:QTWO) and Paycom Software (NYSE:PAYC) are both technology companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.

Profitability

This table compares Q2 and Paycom Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Q2	12.66%	17.85%	10.22%
Paycom Software	23.28%	52.12%	8.40%

Analyst Ratings

This is a summary of recent ratings for Q2 and Paycom Software, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Q2	0	4	9	1	2.79
Paycom Software	1	12	4	0	2.18

Q2 currently has a consensus target price of $78.33, indicating a potential upside of 3.79%. Paycom Software has a consensus target price of $255.36, indicating a potential upside of 5.27%. Given Paycom Software’s higher probable upside, analysts plainly believe Paycom Software is more favorable than Q2.

Valuation & Earnings

This table compares Q2 and Paycom Software”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Q2	$870.26 million	5.36	$52.01 million	$1.69	44.66
Paycom Software	$2.19 billion	4.99	$453.40 million	$10.44	23.23

Paycom Software has higher revenue and earnings than Q2. Paycom Software is trading at a lower price-to-earnings ratio than Q2, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

87.8% of Paycom Software shares are held by institutional investors. 0.9% of Q2 shares are held by company insiders. Comparatively, 13.2% of Paycom Software shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Q2 has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Paycom Software has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500.

Summary

Paycom Software beats Q2 on 8 of the 15 factors compared between the two stocks.

About Q2

Q2 Holdings, Inc. provides digital banking and financial technology solutions to banks, credit unions and other financial institutions. Its cloud-based platform helps institutions deliver online and mobile banking services to consumers and businesses. The company’s offerings include digital account opening, lending, payments, data and analytics, and tools for managing customer relationships. Q2 also provides technology and services that help financial institutions connect with fintech companies and expand their digital offerings.

About Paycom Software

Paycom Software, Inc. provides cloud-based human capital management (HCM) software that helps employers manage payroll and related workforce processes through a unified platform. Its services support organizations throughout the employee life cycle, from hiring and onboarding to payroll, benefits administration, time and labor management, and talent management. The company’s platform includes employee self-service tools and Beti, a feature that enables employees to review and complete their own payroll.