Adobe Systems (NASDAQ: ADBE) and Zendesk (NYSE:ZEN) are both technology companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Profitability

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This table compares Adobe Systems and Zendesk’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Adobe Systems 23.20% 22.15% 12.93%
Zendesk -25.70% -32.88% -19.76%

Valuation & Earnings

This table compares Adobe Systems and Zendesk’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Adobe Systems $7.30 billion 13.57 $1.69 billion $3.39 59.46
Zendesk $430.49 million 9.99 -$110.64 million ($1.11) -38.18

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

Risk and Volatility

Adobe Systems has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Zendesk has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Adobe Systems and Zendesk, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Adobe Systems 0 7 24 0 2.77
Zendesk 0 2 13 0 2.87

Adobe Systems currently has a consensus price target of $196.97, suggesting a potential downside of 2.28%. Zendesk has a consensus price target of $40.43, suggesting a potential downside of 4.60%. Given Adobe Systems’ higher possible upside, equities analysts plainly believe Adobe Systems is more favorable than Zendesk.

Institutional & Insider Ownership

86.8% of Adobe Systems shares are owned by institutional investors. Comparatively, 93.9% of Zendesk shares are owned by institutional investors. 0.4% of Adobe Systems shares are owned by insiders. Comparatively, 5.3% of Zendesk shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Adobe Systems beats Zendesk on 10 of the 14 factors compared between the two stocks.

Adobe Systems Company Profile

Adobe Systems Incorporated is a software company. The Company offers products and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences. It operates through three segments: Digital Media, Digital Marketing, and Print and Publishing. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses and enterprises to create, publish, promote and monetize their digital content. Its Digital Marketing segment provides solutions and services for how digital advertising and marketing are created, managed, executed, measured and optimized. Its Print and Publishing segment addresses market opportunities ranging from the diverse authoring and publishing needs of technical and business publishing to its legacy type and original equipment manufacturer (OEM) printing businesses.

Zendesk Company Profile

Zendesk, Inc. (Zendesk) is a software development company. The Zendesk family of products is built to work together to help organizations understand and manage customer relationships. All Zendesk products share a common interface and are being developed to support a shared services infrastructure and common customer data platform. Zendesk’s products are developed using agile software techniques, and are designed to incorporate and innovate on customer feedback obtained through beta and Early Access Programs (EAPs). Its family of products includes Zendesk Support, Zendesk Chat, Zendesk Talk, Zendesk Help Center, Zendesk Message, Zendesk Explore and Zendesk Connect. Zendesk’s developer platform allows organizations to extend the functionality of its family of products and customize the experience for their employees and customers. Key components of Zendesk’s developer platform include Zendesk Embeddables, Zendesk application program interfaces (APIs) and Zendesk Applications.

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