Analyzing TSS (NASDAQ:TSSI) and Rackspace Technology (NASDAQ:RXT)

TSS (NASDAQ:TSSI) and Rackspace Technology (NASDAQ:RXT) are both small-cap technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Volatility and Risk

TSS has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500. Comparatively, Rackspace Technology has a beta of 3.1, indicating that its share price is 210% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for TSS and Rackspace Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TSS	0	2	1	0	2.33
Rackspace Technology	1	1	0	0	1.50

TSS currently has a consensus price target of $14.00, suggesting a potential upside of 107.72%. Rackspace Technology has a consensus price target of $4.00, suggesting a potential upside of 69.49%. Given TSS’s stronger consensus rating and higher possible upside, equities research analysts clearly believe TSS is more favorable than Rackspace Technology.

Institutional & Insider Ownership

82.5% of Rackspace Technology shares are owned by institutional investors. 16.0% of TSS shares are owned by insiders. Comparatively, 2.3% of Rackspace Technology 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.

Earnings & Valuation

This table compares TSS and Rackspace Technology”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TSS	$193.28 million	0.98	$15.12 million	$0.48	14.04
Rackspace Technology	$2.69 billion	0.22	-$225.80 million	($0.65)	-3.63

TSS has higher earnings, but lower revenue than Rackspace Technology. Rackspace Technology is trading at a lower price-to-earnings ratio than TSS, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares TSS and Rackspace Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TSS	7.44%	19.22%	8.46%
Rackspace Technology	-5.88%	N/A	-1.81%

Summary

TSS beats Rackspace Technology on 11 of the 14 factors compared between the two stocks.

About TSS

TSS, Inc. offers planning, design, engineering, construction management, commissioning and maintenance services. It provides these services primarily for specialized facilities such as data centers, communications rooms, call centers, laboratories, trading floors, network operations centers, medical facilities and similar environments. TSS Inc., formerly known as Fortress International Group, Inc., is based in Columbia, United States.

About Rackspace Technology

Rackspace Technology, Inc. operates as a multi cloud technology services company in the Americas, Europe, the Middle East, Africa, and The Asia-Pacific region. It operates through three segments: Multicloud Services, Apps & Cross Platform, and OpenStack Public Cloud. The company provides public and private cloud managed services, which allow customers to determine, manage, and optimize the right infrastructure, platforms, and services; professional services related to designing and building multi cloud solutions and cloud-native applications; and managed hosting and colocation services. It also helps customers establish governance, operational, and architectural frameworks to mitigate risks and reduce inefficiencies to manage costs, achieve industry-specific compliance objectives, and enhance security. In addition, the company offers managed applications, including running large-scale SaaS applications for customers on its and public cloud infrastructure; managed security services in the areas of security threat assessment and prevention, threat detection and response, rapid remediation, governance, and risk and compliance assistance across multiple cloud platforms, as well as privacy and data protection services, including detailed access restrictions and reporting; data services; and professional services related to designing and implementing application, security, and data services. Rackspace Technology, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.