Critical Analysis: 8X8 (NASDAQ:EGHT) and Synopsys (NASDAQ:SNPS)

Synopsys (NASDAQ:SNPS) and 8X8 (NASDAQ:EGHT) are both technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.

Analyst Ratings

This is a summary of current ratings and target prices for Synopsys and 8X8, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Synopsys	1	3	17	1	2.82
8X8	1	1	2	0	2.25

Synopsys currently has a consensus price target of $584.11, indicating a potential upside of 17.35%. 8X8 has a consensus price target of $3.12, indicating a potential upside of 44.68%. Given 8X8’s higher probable upside, analysts clearly believe 8X8 is more favorable than Synopsys.

Volatility and Risk

Synopsys has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, 8X8 has a beta of 1.85, indicating that its stock price is 85% more volatile than the S&P 500.

Profitability

This table compares Synopsys and 8X8’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Synopsys	11.43%	6.24%	3.95%
8X8	0.64%	28.72%	6.14%

Earnings and Valuation

This table compares Synopsys and 8X8″s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Synopsys	$7.05 billion	13.52	$1.33 billion	$5.66	87.94
8X8	$735.75 million	0.42	$1.65 million	$0.04	54.00

Synopsys has higher revenue and earnings than 8X8. 8X8 is trading at a lower price-to-earnings ratio than Synopsys, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

85.5% of Synopsys shares are held by institutional investors. Comparatively, 94.0% of 8X8 shares are held by institutional investors. 0.6% of Synopsys shares are held by company insiders. Comparatively, 2.1% of 8X8 shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Synopsys beats 8X8 on 9 of the 15 factors compared between the two stocks.

About Synopsys

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It operates in three segments: Design Automation, Design IP, and Software Integrity. The company offers Digital and Custom IC Design solution that provides digital design implementation solutions; Verification solution that offers virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy applications; logic libraries and embedded memories; processor cores, software, and application-specific instruction-set processor tools for embedded applications; security IP solutions; IP solutions for automotive market; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers HAPS FPGA-based prototyping systems; virtual prototyping solutions; and Platform Architect solutions for SoC architecture analysis and optimization, as well as optical products, and mechatronic simulations. Further, it provides security and quality testing products, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. Additionally, the company provides intelligent orchestration solution, software risk manager, and black duck software composition analysis tools. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Sunnyvale, California.

About 8X8

8×8, Inc. engages in the provision of enterprise communication solutions. It offers solutions to the business services, education, financial services, government, healthcare, and manufacturing industries. The company was founded in February 1987 and is headquartered in Campbell, CA.