Critical Review: Rapid7 (RPD) and Its Rivals

Rapid7 (NASDAQ: RPD) is one of 118 public companies in the “Software” industry, but how does it compare to its peers? We will compare Rapid7 to related companies based on the strength of its analyst recommendations, dividends, valuation, risk, profitability, earnings and institutional ownership.

Earnings & Valuation

This table compares Rapid7 and its peers revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Rapid7 $178.06 million -$36.89 million -17.63
Rapid7 Competitors $1.52 billion $446.91 million 40.35

Rapid7’s peers have higher revenue and earnings than Rapid7. Rapid7 is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Rapid7 and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rapid7 -23.67% -98.26% -16.93%
Rapid7 Competitors -43.38% -25.11% -9.90%

Volatility and Risk

Rapid7 has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, Rapid7’s peers have a beta of 0.98, suggesting that their average share price is 2% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Rapid7 and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rapid7 0 1 6 0 2.86
Rapid7 Competitors 263 2006 4264 84 2.63

Rapid7 currently has a consensus price target of $20.21, suggesting a potential upside of 14.66%. As a group, “Software” companies have a potential upside of 3.89%. Given Rapid7’s stronger consensus rating and higher probable upside, analysts plainly believe Rapid7 is more favorable than its peers.

Insider and Institutional Ownership

71.0% of Rapid7 shares are held by institutional investors. Comparatively, 61.0% of shares of all “Software” companies are held by institutional investors. 56.9% of Rapid7 shares are held by insiders. Comparatively, 17.8% of shares of all “Software” companies are held by 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.

About Rapid7

Rapid7, Inc. is a provider analytics for security and information technology (IT) operations that enable organizations to implement an analytics-driven approach to cyber security and IT operations. The Company’s analytics enable organizations to contextualize and prioritize the threats facing their physical, virtual and cloud assets, including those posed by the behaviors of their users. Leveraging its IT data and analytics platform, its solutions enable organizations to manage their cyber security exposure and manage IT operations. Its solutions empower organizations to prevent attacks by providing visibility into vulnerabilities, and allow them to detect compromises, respond to breaches and correct the underlying causes of attacks. By providing a unified IT and security platform, with automated workflow, it enables IT and security to work together to develop, operate and secure their environment.

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