FRONTEO (NASDAQ:FTEO) and RingCentral (NASDAQ:RNG) Critical Analysis

FRONTEO (NASDAQ:FTEO) and RingCentral (NYSE:RNG) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for FRONTEO and RingCentral, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FRONTEO 0 0 0 0 N/A
RingCentral 0 2 18 1 2.95

RingCentral has a consensus price target of $228.50, suggesting a potential downside of 2.83%. Given RingCentral’s higher possible upside, analysts clearly believe RingCentral is more favorable than FRONTEO.

Valuation & Earnings

This table compares FRONTEO and RingCentral’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FRONTEO $101.88 million 1.05 $1.96 million N/A N/A
RingCentral $902.86 million 21.86 -$26.20 million ($0.19) -1,237.63

FRONTEO has higher earnings, but lower revenue than RingCentral.

Profitability

This table compares FRONTEO and RingCentral’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FRONTEO -10.07% -22.46% -7.22%
RingCentral -5.94% -3.67% -1.28%

Volatility & Risk

FRONTEO has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, RingCentral has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Insider and Institutional Ownership

83.3% of RingCentral shares are owned by institutional investors. 11.0% of RingCentral shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

RingCentral beats FRONTEO on 10 of the 13 factors compared between the two stocks.

FRONTEO Company Profile

FRONTEO, Inc. provides Asian-language eDiscovery solutions and services primarily in the United States, Europe, and Asia. The company operates in two segments, Legal Tech Services and Artificial Intelligence (AI) Solutions Services. It has eDiscovery and forensic information documented in Japanese, Korean, Chinese, and English. The company assists clients involved in cross-border litigation, administrative proceedings, and internal investigations, including those related to antitrust investigations, intellectual property litigation, the Foreign Corrupt Practices Act, and product liability investigations. It also provides Lit i View, an online eDiscovery software, which handles Asian-language characters, encoding schemes, and native file systems; and Intelligence Cloud solution to maintain client data during and after a particular litigation or investigation, and data and documents in a relational database of its clients' data and documents. In addition, the company offers electronic data forensic investigation solutions and services that enables the preservation, analysis, processing, and production of electronically stored information in connection with fraud and corporate information leakage; forensic tools; and Lit i View XAMINER, a digital forensic software, and other related hardware and software products. Further, it helps to create document management procedures; conduct corporate risk audits; and comply with legal requirements to provide information to stakeholders. Additionally, the company provides AI solutions in the fields of business intelligence, healthcare, and digital communications. It serves enterprises, government agencies, law firms, and other organizations under the FRONTEO, KIBIT, and Landscaping brands. The company was formerly known as UBIC, Inc. and changed its name to FRONTEO, Inc. in July 2016. FRONTEO, Inc. was founded in 2003 and is headquartered in Tokyo, Japan.

RingCentral Company Profile

RingCentral, Inc. provides software-as-a-service solutions that enable businesses to communicate, collaborate, and connect primarily in North America. The company's products include RingCentral Office, provides communication and collaboration across various modes, including high-definition voice, video, SMS, messaging and collaboration, conferencing, online meetings, and fax through smartphones, tablets, PCs, and desk phones; RingCentral Professional, a cloud based virtual telephone service for professionals, as well as provides inbound call answering and management services, and includes inbound local, long-distance, and toll-free minutes; and RingCentral Fax that provides online fax capabilities that allow businesses to send and receive fax documents without a fax machine. Its products also comprise RingCentral Contact Center, a collaborative contact center solution that delivers omni-channel; and RingCentral Glip, a team messaging and collaboration solution that allows a range of teams to stay connected through various modes of communication through an integration with RingCentral Office. The company serves a range of industries, including financial services, healthcare, legal services, real estate, retail, technology, insurance, construction, hospitality, and state and local government, as well as others. It sells its products through a network of direct sales representatives, as well as sales agents and channel partners. The company was incorporated in 1999 and is headquartered in Belmont, California.

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