SoundHound AI (NASDAQ:SOUN) and Leidos (NYSE:LDOS) Critical Analysis

SoundHound AI (NASDAQ:SOUN) and Leidos (NYSE:LDOS) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Volatility and Risk

SoundHound AI has a beta of 2.58, indicating that its stock price is 158% more volatile than the S&P 500. Comparatively, Leidos has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Profitability

This table compares SoundHound AI and Leidos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SoundHound AI	-91.84%	-41.46%	-25.73%
Leidos	8.15%	31.92%	11.23%

Valuation & Earnings

This table compares SoundHound AI and Leidos”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SoundHound AI	$168.92 million	21.15	-$14.01 million	($0.47)	-17.98
Leidos	$17.17 billion	0.93	$1.45 billion	$10.92	11.68

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

Institutional and Insider Ownership

19.3% of SoundHound AI shares are owned by institutional investors. Comparatively, 76.1% of Leidos shares are owned by institutional investors. 8.8% of SoundHound AI shares are owned by company insiders. Comparatively, 0.8% of Leidos shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for SoundHound AI and Leidos, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SoundHound AI	1	3	5	1	2.60
Leidos	0	6	6	1	2.62

SoundHound AI presently has a consensus target price of $14.93, indicating a potential upside of 76.67%. Leidos has a consensus target price of $193.64, indicating a potential upside of 51.86%. Given SoundHound AI’s higher possible upside, analysts plainly believe SoundHound AI is more favorable than Leidos.

Summary

Leidos beats SoundHound AI on 10 of the 14 factors compared between the two stocks.

About SoundHound AI

SoundHound AI, Inc. develops independent voice artificial intelligence (AI) solutions that enables businesses across automotive, TV, and IoT, and to customer service industries to deliver high-quality conversational experiences to their customers. Its products include Houndify platform that offers a suite of Houndify tools to help brands build conversational voice assistants, such as Application Programming Interfaces (API) for text and voice queries, support for custom commands, extensive library of content domains, inclusive software development kit platforms, collaboration capabilities, diagnostic tools, and built-in analytics; SoundHound Chat AI that integrates with knowledge domains, pulling real-time data like weather, sports, stocks, flight status, and restaurants; and SoundHound Smart Answering is built to offer customer establishments custom AI-powered voice assistant. The company's products also include CaiNET software that uses machine learning to enhance how domains work together to handle queries; CaiLAN software that arbitrates responses so users get answers from the right domain; Dynamic Interaction a real-time, multimodal customer service interface; Smart Ordering which offers an easy-to-understand voice assistant for restaurants; Employee Assist; automatic speech recognition; natural language understanding; wake words; custom domains; text-to-speech; and embedded voice solutions. The company was founded in 2005 and is headquartered in Santa Clara, California.

About Leidos

Leidos Holdings, Inc., together with its subsidiaries, provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. The company operates through Defense Solutions, Civil, and Health segments. The Defense Solutions segment offers national security solutions and systems for air, land, sea, space, and cyberspace for the U.S. Intelligence Community, the Department of Defense, the space development agency, the National Aeronautics and Space Administration, defense information systems agency, military services, and government agencies of U.S. allies abroad, as well as other federal and commercial customers in the national security industry. The solutions include technology, large-scale systems, command and control platforms, data analytics, logistics, and cybersecurity solutions, as well as intelligence analysis and operations support services to critical missions. The Civil segment provides systems integration services to air navigation service providers, including the federal aviation administration, the En route automation modernization, advanced technology oceanic procedure, time based flow management, terminal flight data management, geo-7, and future flight services, as well as enterprise-information display systems; and security detection services. It also offers information technology (IT) solutions in cloud computing, mobility, application modernization, DevOps, data center, network modernization, asset management, help desk operations, and digital workplace enablement; and environment, energy, and infrastructure services. The Health segment offers solutions to federal and commercial customers responsible for health and well-being of people, include health information management, managed health, digital modernization, and life sciences research and development services. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.