Financial Analysis: Grid Dynamics (NASDAQ:GDYN) & Vertex (NASDAQ:VERX)

Vertex (NASDAQ:VERX) and Grid Dynamics (NASDAQ:GDYN) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, risk, earnings, valuation, institutional ownership and dividends.

Earnings & Valuation

This table compares Vertex and Grid Dynamics”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vertex	$666.78 million	7.60	-$13.09 million	($0.34)	-95.59
Grid Dynamics	$350.57 million	4.33	-$1.76 million	$0.04	460.50

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

Profitability

This table compares Vertex and Grid Dynamics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vertex	4.73%	24.92%	6.65%
Grid Dynamics	1.15%	-0.33%	-0.29%

Analyst Recommendations

This is a summary of current recommendations and price targets for Vertex and Grid Dynamics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vertex	0	5	7	1	2.69
Grid Dynamics	0	0	5	1	3.17

Vertex currently has a consensus price target of $50.00, indicating a potential upside of 53.85%. Grid Dynamics has a consensus price target of $19.17, indicating a potential upside of 4.05%. Given Vertex’s higher possible upside, equities research analysts clearly believe Vertex is more favorable than Grid Dynamics.

Insider and Institutional Ownership

70.3% of Vertex shares are owned by institutional investors. Comparatively, 71.2% of Grid Dynamics shares are owned by institutional investors. 44.6% of Vertex shares are owned by insiders. Comparatively, 7.2% of Grid Dynamics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Vertex has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Grid Dynamics has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Summary

Vertex beats Grid Dynamics on 8 of the 14 factors compared between the two stocks.

About Vertex

Vertex, Inc., together with its subsidiaries, provides enterprise tax technology solutions for retail trade, wholesale trade, and manufacturing industries in the United States and internationally. The company offers tax determination; compliance and reporting, including workflow management tools, role-based security, and event logging; tax data management; document management; analytics and insights; pre-built integration that includes mapping data fields, and business logic and configurations; industry-specific solutions; and technology specific solutions, such as chain flow accelerator and SAP-specific tools. It provides implementation services, such as configuration, data migration and implementation, and support and training; and managed services, including tax return preparation, filing and tax payment, and notice management. The company sells its software products through software licenses and software as a service subscription. Vertex, Inc. was founded in 1978 and is headquartered in King of Prussia, Pennsylvania.

About Grid Dynamics

Grid Dynamics Holdings, Inc., together with its subsidiaries, provides technology consulting, platform and product engineering, and analytics services in North America, Europe, and internationally. It offers cloud platform and product engineering services, such as architecting, designing, and building scalable and secure cloud-based platforms and business applications; and AI/machine learning and data platform engineering services that build platforms to facilitate batch and streaming data ingestion, quality governance, orchestration, semantic modeling, observability, and analysis at scale. The company provides digital engagement services, including digital ecosystem design and implementation; and supply chain, Internet of Thing, and advanced manufacturing, which focuses on transforming traditional operations into smart and connected ecosystems. It serves customers that operate in the tech, media, telecommunications, retail, consumer packaged goods, manufacturing, and finance industries. The company was formerly known as ChaSerg Technology Acquisition Corp. and changed its name to Grid Dynamics Holdings, Inc. Grid Dynamics Holdings, Inc. was founded in 2006 and is headquartered in San Ramon, California.