Critical Review: CS Disco (NYSE:LAW) and Qualys (NASDAQ:QLYS)

Qualys (NASDAQ:QLYS) and CS Disco (NYSE:LAW) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Volatility and Risk

Qualys has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, CS Disco has a beta of 1.91, indicating that its share price is 91% more volatile than the S&P 500.

Profitability

This table compares Qualys and CS Disco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Qualys	29.38%	37.52%	19.41%
CS Disco	-24.20%	-26.58%	-19.89%

Insider and Institutional Ownership

99.3% of Qualys shares are held by institutional investors. Comparatively, 58.1% of CS Disco shares are held by institutional investors. 0.7% of Qualys shares are held by company insiders. Comparatively, 16.8% of CS Disco shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Qualys and CS Disco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qualys	$669.12 million	9.36	$198.32 million	$5.78	31.32
CS Disco	$156.85 million	1.84	-$44.37 million	($0.63)	-7.06

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

Analyst Ratings

This is a breakdown of current ratings and price targets for Qualys and CS Disco, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qualys	1	11	3	2	2.35
CS Disco	1	1	2	0	2.25

Qualys currently has a consensus price target of $180.53, suggesting a potential downside of 0.29%. CS Disco has a consensus price target of $8.00, suggesting a potential upside of 79.90%. Given CS Disco’s higher possible upside, analysts plainly believe CS Disco is more favorable than Qualys.

Summary

Qualys beats CS Disco on 12 of the 15 factors compared between the two stocks.

About Qualys

Qualys, Inc., together with its subsidiaries, provides cloud-based platform delivering information technology (IT), security, and compliance solutions in the United States and internationally. It offers Qualys Cloud Apps, which include Cybersecurity Asset Management and External Attack Surface Management; Vulnerability Management, Detection and Response; Web Application Scanning; Patch Management; Custom Assessment and Remediation; Multi-Vector Endpoint Detection and Response; Context Extended Detection and Response; Policy Compliance; File Integrity Monitoring; and Qualys TotalCloud, as well as Cloud Workload Protection, Cloud Detection and Response, Cloud Security Posture Management, Infrastructure as Code, and Container Security. The company's integrated suite of IT, security, and compliance solutions delivered on its Qualys' Enterprise TruRisk Platform enables customers to identify and manage IT assets; collect and analyze IT security data; discover and prioritize vulnerabilities; quantify cyber risk exposure; recommend and implement remediation actions; and verify the implementation of such actions. It also provides asset tagging and management, reporting and dashboards, questionnaires and collaboration, remediation and workflow, big data correlation and analytics engine, and alerts and notifications that enable clients to detect vulnerabilities, and measure and remediate cyber risk. The company offers its solutions to enterprises, government entities, and small and medium-sized businesses in various industries, including education, financial services, government, healthcare, insurance, manufacturing, media, retail, technology, and utilities through its sales teams, as well as through its network of channel partners, such as security consulting organizations, managed service providers, resellers, cloud providers, and consulting firms. Qualys, Inc. was incorporated in 1999 and is headquartered in Foster City, California.

About CS Disco

CS Disco, Inc. provides cloud-native and artificial intelligence-powered legal solutions for legal hold, legal request, ediscovery, legal document review, and case management in the United States and internationally. It offers DISCO Request, a solution that automates response compliance for legal requests; and DISCO Ediscovery, a solution that automates the ediscovery process and saves legal departments from manual tasks associated with collecting, processing, enriching, searching, reviewing, analyzing, producing, and using enterprise data that is at issue in legal matters. The company also provides DISCO Hold, a solution that automates manual work to preserve data, notify custodians, track holds with a defensible audit trail, and collect data when ready; DISCO Review, an AI-powered document review solution that delivers legal document reviews; and DISCO Case Builder, a solution that allows legal professionals to collaborate with teams to build a compelling case by offering a single place to search, organize, and review witness testimony and other legal data. The company's solutions are used in various legal matters comprising litigation, investigation, compliance, and diligence. It serves enterprises, law firms, legal services providers, and governments. CS Disco, Inc. was founded in 2012 and is headquartered in Austin, Texas.