Contrasting Zscaler (NASDAQ:ZS) and Crexendo (NASDAQ:CXDO)

Crexendo (NASDAQ:CXDO) and Zscaler (NASDAQ:ZS) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Valuation and Earnings

This table compares Crexendo and Zscaler”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Crexendo	$68.17 million	2.57	$5.07 million	$0.14	37.43
Zscaler	$3.35 billion	10.92	-$63.18 million	($0.39)	-575.49

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

Volatility and Risk

Crexendo has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500. Comparatively, Zscaler has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Insider and Institutional Ownership

9.5% of Crexendo shares are owned by institutional investors. Comparatively, 46.5% of Zscaler shares are owned by institutional investors. 34.0% of Crexendo shares are owned by insiders. Comparatively, 17.2% of Zscaler shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Crexendo and Zscaler, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Crexendo	0	1	3	0	2.75
Zscaler	1	8	36	0	2.78

Crexendo currently has a consensus price target of $10.50, suggesting a potential upside of 100.38%. Zscaler has a consensus price target of $236.65, suggesting a potential upside of 5.44%. Given Crexendo’s higher probable upside, analysts clearly believe Crexendo is more favorable than Zscaler.

Profitability

This table compares Crexendo and Zscaler’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Crexendo	5.31%	14.34%	11.44%
Zscaler	-1.88%	1.23%	0.40%

Summary

Crexendo beats Zscaler on 9 of the 14 factors compared between the two stocks.

About Crexendo

Crexendo, Inc. provides cloud communication platform and services, video collaboration, and managed IT services for businesses in the United States and internationally. It operates through two segments, Cloud Telecommunications Services and Software Solutions. The Cloud Telecommunications segment provides telecommunications services that transmit calls using Internet protocol (IP) or cloud technology, which converts voice signals into digital data packets for transmission over the Internet or cloud; and broadband Internet services, as well as develops end user portals for account and license management, and billing and customer support. This segment is also involved in the sale and lease of cloud telecommunications equipment. In addition, it offers hardware, software, and unified communication solutions for businesses using IP or cloud technology over high-speed internet connection through various devices and user interfaces, such as desktop phones and/or mobile, and desktop applications under the Crexendo brand name. The Software Solutions segment provides a suite of unified communications, collaboration, video conferencing, and contact center solutions. This segment also offers SNAPsolution, an IP-based platform; SNAPaccel, a software-as-a-service based software; subscription maintenance and support services; and professional services, including consulting, technical support, resident engineer, design, and installation services. The company was formerly known as iMergent, Inc. and changed its name to Crexendo, Inc. in May 2011. Crexendo, Inc. was incorporated in 1995 and is based in Tempe, Arizona.

About Zscaler

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that provides users, workloads, IoT, and OT devices secure access to externally managed applications, including software-as-a-service (SaaS) applications and internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also provides Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. In addition, the company offers Posture Control solutions comprising Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and PaaS to reduce risk and ensure compliance with industry and organizational benchmarks; Cloud Infrastructure Entitlement Management that detects and remediates excessive or unused cloud permissions and enforces least privileged access without disrupting productivity; Infrastructure as Code (IaC), which analyzes IaC templates to identify misconfigurations and other security issues prior to deployment to cloud infrastructure; and Vulnerability Scanning and Data Loss Prevention solutions. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. The company serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.