FalconStor Software (OTCMKTS:FALC) & Avalara (OTCMKTS:AVLR) Financial Analysis

FalconStor Software (OTCMKTS:FALC) and Avalara (NYSE:AVLR) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.

Risk & Volatility

FalconStor Software has a beta of -0.09, meaning that its share price is 109% less volatile than the S&P 500. Comparatively, Avalara has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Earnings & Valuation

This table compares FalconStor Software and Avalara’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FalconStor Software $16.54 million 1.61 -$1.75 million N/A N/A
Avalara $382.42 million 27.39 -$50.21 million ($0.59) -226.42

FalconStor Software has higher earnings, but lower revenue than Avalara.

Analyst Recommendations

This is a breakdown of recent ratings for FalconStor Software and Avalara, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FalconStor Software 0 0 0 0 N/A
Avalara 0 0 15 1 3.06

Avalara has a consensus target price of $126.57, indicating a potential downside of 5.25%. Given Avalara’s higher possible upside, analysts clearly believe Avalara is more favorable than FalconStor Software.

Institutional and Insider Ownership

85.4% of Avalara shares are held by institutional investors. 61.5% of FalconStor Software shares are held by insiders. Comparatively, 4.0% of Avalara shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares FalconStor Software and Avalara’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FalconStor Software -15.41% -0.87% -2.36%
Avalara -12.99% -9.88% -6.05%

Summary

Avalara beats FalconStor Software on 8 of the 13 factors compared between the two stocks.

About FalconStor Software

FalconStor Software, Inc., a storage software company, develops, manufactures, and sells data migration, business continuity, disaster recovery, optimized backup, and de-duplication solutions worldwide. It offers FreeStor, a software-defined platform that provides migration, continuity, protection/recovery, and optimization for storage environment through a single management interface; FalconStor network storage server for migration, storage virtualization, provisioning, and management; and FalconStor continuous data protector for bootable snapshots, zero-impact backup, and local and remote disaster recovery. The company also provides FalconStor RecoverTrac disaster recovery automation tool; and FalconStor optimized backup and deduplication solution for optimized backup, archive to tape, block and file based deduplication, and storage capacity optimization. In addition, it offers maintenance, implementation, and engineering services. The company sells its products through authorized partners, value-added resellers, solution providers, system integrators, direct market resellers, distributors, managed service providers, cloud service providers, and original equipment manufacturers, as well as directly to customers. FalconStor Software, Inc. was founded in 1989 and is headquartered in Austin, Texas.

About Avalara

Avalara, Inc. provides cloud-based solutions for transaction tax compliance worldwide. It offers a suite of compliance solutions that enable businesses to address the complexity of transaction tax compliance; process transactions in real time; produce detailed records of transaction tax determinations; and reduce errors, audit exposure, and total transaction tax compliance costs. The company's solutions include AvaTax, a solution for determining sales tax in the United States; Avalara Returns for tax return preparation, filing, and remittance; and Avalara Compliance Document Management solution, which creates, validates, stores, and manages sales tax exemption and reseller certificates. It also provides professional services, including nexus studies and analysis, voluntary compliance initiatives, tax registrations, and specialized tax research; MatrixMaster, a product taxability database for retail operations; Avalara CloudConnect, a hardware device for processing and storing transactions on-site for regularly scheduled uploads to AvaTax; Avalara Licensing, an online platform for business licenses and sales tax registrations; VAT Expert, a Web-based solution that checks the validity of customer and supplier value-added tax (VAT) numbers and provides VAT determinations in the form of invoices; and Brazilian tax compliance solutions that address the Brazilian transaction tax regimes through electronic compliance report validation, electronic invoice authentication and preparation, tax determination, and returns preparation. The company was formerly known as Advantage Solutions, Inc. and changed its name to Avalara, Inc. in December 2005. Avalara, Inc. was incorporated in 1999 and is headquartered in Seattle, Washington.

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