Compass (NYSE:COMP) & Q2 (NYSE:QTWO) Critical Review

Q2 (NYSE:QTWO) and Compass (NYSE:COMP) are both mid-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, profitability, earnings, analyst recommendations and dividends.

Profitability

This table compares Q2 and Compass’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Q2	6.54%	12.52%	5.56%
Compass	-0.84%	-7.99%	-3.76%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Q2 and Compass, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Q2	0	5	8	1	2.71
Compass	1	4	8	0	2.54

Q2 presently has a consensus price target of $79.29, suggesting a potential upside of 64.06%. Compass has a consensus price target of $13.64, suggesting a potential upside of 64.97%. Given Compass’ higher probable upside, analysts plainly believe Compass is more favorable than Q2.

Risk and Volatility

Q2 has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500. Comparatively, Compass has a beta of 2.57, suggesting that its share price is 157% more volatile than the S&P 500.

Valuation & Earnings

This table compares Q2 and Compass”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Q2	$794.81 million	3.79	$52.01 million	$0.79	61.17
Compass	$6.96 billion	0.67	-$58.50 million	($0.10)	-82.66

Q2 has higher earnings, but lower revenue than Compass. Compass 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

67.1% of Compass shares are held by institutional investors. 0.3% of Q2 shares are held by company insiders. Comparatively, 4.1% of Compass shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Q2 beats Compass on 9 of the 14 factors compared between the two stocks.

About Q2

Q2 Holdings, Inc. provides cloud-based digital solutions to regional and community financial institutions in the United States. The company offers Digital Banking Platform, an end-to-end digital banking platform supports its financial institution customers in their delivery of unified digital banking services across digital channels. Its digital banking platform solutions, comprising Q2 Consumer Banking, Q2 Small Business and Commercial, Q2mobile Remote Deposit Capture, Q2 Sentinel, Q2 Patrol, Q2 SMART, Q2 Contextual Personal Financial Management, Q2 Goals, Q2 CardSwap, Q2 Gro, Q2 Innovation Studio, Q2 Biller Direct, ClickSWITCH, Sensibill, Centrix Dispute Tracking System, Centrix Payments I.Q. System, and Centrix Exact/Transaction Management System. The company also provides lending solutions, which consists precisionlender solutions, a cloud-based platform, data-driven sales enablement, relationship pricing, and portfolio management solution includes precisionlender platform, premium treasury pricing, data studio, and Andi; and Q2 Cloud Lending solutions, a cloud-based digital lending platform and end-to-end lending solution that allows financial institutions, FinTechs, and Alt-FIs to automate and digitize their lending activities, supporting digital lending applications, scoring, underwriting, servicing, and collections for multiple assets classes comprising Q2 CL portal, originate, loan, marketplace, and collections. In addition, it offers Q2 Innovation Studio, an application program interface, or API, based and software development kit, or SDK, based open technology platform; and Helix, a cloud-native, real-time core processing platform. The company was formerly known as CBG Holdings, Inc. and changed its name to Q2 Holdings, Inc. in March 2013. Q2 Holdings, Inc. was founded in 2004 and is headquartered in Austin, Texas.

About Compass

Compass, Inc. provides real estate brokerage services in the United States. It operates a cloud-based platform that provides an integrated suite of software for customer relationship management, marketing, client service, operations, and other functionality in the real estate industry. The company offers mobile apps that allow agents to manage their business anytime and anywhere, as well as designs consumer-grade user interfaces, automated and simplified workflows for agent-client interactions, and insight-rich dashboards and reports. It also provides full-service title and escrow/settlement services to real estate agents' clients, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans; and Compass Concierge, a program in which home sellers access to capital to front the cost of home improvement services. The company was formerly known as Urban Compass, Inc. and changed its name to Compass, Inc. in January 2021.Compass, Inc. was incorporated in 2012 and is headquartered in New York, New York.