Head-To-Head Review: ZIX (NASDAQ:ZIXI) and Tucows (NASDAQ:TCX)

Tucows (NASDAQ:TCX) and ZIX (NASDAQ:ZIXI) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitability, analyst recommendations and earnings.

Earnings & Valuation

This table compares Tucows and ZIX’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tucows $346.01 million 1.86 $17.14 million $1.59 38.09
ZIX $70.48 million 6.75 $15.44 million $0.32 26.78

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

Analyst Ratings

This is a summary of recent ratings and target prices for Tucows and ZIX, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tucows 0 1 0 0 2.00
ZIX 0 0 3 0 3.00

ZIX has a consensus price target of $11.67, suggesting a potential upside of 36.13%. Given ZIX’s stronger consensus rating and higher possible upside, analysts plainly believe ZIX is more favorable than Tucows.

Volatility & Risk

Tucows has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, ZIX has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Profitability

This table compares Tucows and ZIX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tucows 4.92% 21.03% 4.55%
ZIX 8.75% 20.21% 6.25%

Insider and Institutional Ownership

58.8% of Tucows shares are held by institutional investors. Comparatively, 72.3% of ZIX shares are held by institutional investors. 11.8% of Tucows shares are held by company insiders. Comparatively, 20.2% of ZIX shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

ZIX beats Tucows on 8 of the 14 factors compared between the two stocks.

About Tucows

Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in Canada, the United States, and Germany. It operates in two segments, Network Access Services and Domain Services. The Network Access Services segment engages in the provision of mobile services under the Ting Mobile name, including the sale of retail telephony services, mobile phone hardware, and related accessories. It also provides roaming service to international travelers under the Zipsim and Always Online Wireless names; fixed high-speed Internet access services to consumer and business customers; Internet hosting and network consulting services; and billing, provisioning, and customer care software solutions to Internet Service Providers (ISPs) through its Platypus billing software. This segment distributes its products and services through the Ting Website, as well as through third-party retail stores and online retailers. The Domain Services segment offers wholesale and retail domain name registration services, value added services, and portfolio services under the OpenSRS, eNom, and Hover names. Its value-added services include hosted email, which provides email delivery and Webmail access to various mailboxes; Internet security services; and Internet hosting, WHOIS privacy, publishing tools, and other value-added services for end-users. In addition, this segment sells retail domain name registration and email services to individuals and small businesses; and leases and sells a portfolio of domain names. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.

About ZIX

Zix Corporation provides email encryption, data loss prevention (DLP), threat protection, archiving, and bring-your-own-device mobile security solutions for the healthcare, financial services, insurance, and government sectors primarily in the United States. The company offers ZixEncrypt that bundles email encryption and DLP capabilities to enable the secure exchange of email; ZixProtect, a cloud-based service that defends organizations from zero-day malware, ransomware, phishing, CEO fraud, W-2 phishing attacks, spam, and viruses in email; and ZixArchive, a cloud-based email retention solution that enables user retrieval, compliance, and e-discovery. It also provides ZixOne, a mobile email app, which offers mobile access to corporate email and does not allow data to be persistently stored on employee's device. Zix Corporation sells its services through a direct sales force; and a network of resellers and other distribution partners. The company was formerly known as ZixIt Corporation and changed its name to Zix Corporation in 2002. Zix Corporation was incorporated in 1988 and is headquartered in Dallas, Texas.

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