Stem (NYSE:STEM – Get Free Report) and BlackLine (NASDAQ:BL – Get Free Report) are both small-cap technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.
Profitability
This table compares Stem and BlackLine’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Stem | -49.37% | N/A | -21.85% |
| BlackLine | 4.75% | 20.89% | 4.19% |
Analyst Ratings
This is a summary of current recommendations and price targets for Stem and BlackLine, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Stem | 1 | 4 | 1 | 0 | 2.00 |
| BlackLine | 3 | 6 | 5 | 0 | 2.14 |
Stem presently has a consensus target price of $6.54, suggesting a potential upside of 151.12%. BlackLine has a consensus target price of $39.50, suggesting a potential upside of 14.98%. Given Stem’s higher probable upside, analysts plainly believe Stem is more favorable than BlackLine.
Valuation & Earnings
This table compares Stem and BlackLine”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Stem | $156.27 million | 0.16 | $137.76 million | ($8.49) | -0.31 |
| BlackLine | $732.45 million | 2.73 | $24.17 million | $0.57 | 60.27 |
Stem has higher earnings, but lower revenue than BlackLine. Stem is trading at a lower price-to-earnings ratio than BlackLine, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
61.6% of Stem shares are owned by institutional investors. Comparatively, 95.1% of BlackLine shares are owned by institutional investors. 5.1% of Stem shares are owned by insiders. Comparatively, 9.1% of BlackLine 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.
Volatility and Risk
Stem has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500. Comparatively, BlackLine has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.
Summary
BlackLine beats Stem on 11 of the 14 factors compared between the two stocks.
About Stem
Stem, Inc. operates as a digitally connected, intelligent, and renewable energy storage network provider worldwide. The company offers energy storage hardware sourced from original equipment manufacturers (OEMs); edge hardware to aid in the collection of site data and real-time operation and control of the site and other optional equipment; and Athena, a software platform, which offers battery hardware and software-enabled services to operate the energy storage systems. It serves commercial and industrial enterprises, independent power producers, renewable project developers, and utilities and grid operators. The company was incorporated in 2009 and is headquartered in San Francisco, California.
About BlackLine
BlackLine, Inc. operates a cloud-based software platform which is designed to transform accounting and finance operations for organizations of all types and sizes. Its scalable platform supports critical accounting processes such as the financial close, account reconciliations, intercompany accounting, and controls assurance. The company was founded by Therese Tucker in May 2001 and is headquartered in Woodland Hills, CA.
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