Comparing DocuSign (NASDAQ:DOCU) & Freshworks (NASDAQ:FRSH)

DocuSign (NASDAQ:DOCU) and Freshworks (NASDAQ:FRSH) are both business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.

Risk and Volatility

DocuSign has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Freshworks has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Profitability

This table compares DocuSign and Freshworks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DocuSign	34.56%	16.18%	6.47%
Freshworks	-15.72%	-9.08%	-6.67%

Insider & Institutional Ownership

77.6% of DocuSign shares are owned by institutional investors. Comparatively, 75.6% of Freshworks shares are owned by institutional investors. 1.7% of DocuSign shares are owned by insiders. Comparatively, 19.2% of Freshworks shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares DocuSign and Freshworks”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DocuSign	$2.86 billion	5.06	$73.98 million	$0.52	135.92
Freshworks	$652.94 million	5.22	-$137.44 million	($0.40)	-28.50

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

Analyst Recommendations

This is a summary of recent recommendations for DocuSign and Freshworks, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DocuSign	2	7	2	0	2.00
Freshworks	0	6	9	0	2.60

DocuSign presently has a consensus target price of $63.40, indicating a potential downside of 10.30%. Freshworks has a consensus target price of $17.86, indicating a potential upside of 56.64%. Given Freshworks’ stronger consensus rating and higher probable upside, analysts clearly believe Freshworks is more favorable than DocuSign.

Summary

DocuSign beats Freshworks on 9 of the 14 factors compared between the two stocks.

About DocuSign

DocuSign, Inc. provides electronic signature solution in the United States and internationally. The company provides e-signature solution that enables sending and signing of agreements on various devices; Contract Lifecycle Management (CLM), which automates workflows across the entire agreement process; Document Generation streamlines the process of generating new, custom agreements; and Gen for Salesforce, which allows sales representatives to automatically generate agreements with a few clicks from within Salesforce. It also provides Identify, a signer-identification option for checking government-issued IDs; Standards-Based Signatures, which support signatures that involve digital certificates; Monitor that uses advanced analytics to track DocuSign eSignature web, mobile, and API account; Notary which enables notaries public to conduct remote online notarization transactions; and Web Forms, a web forms that quickly draft agreements using pre-populated data from completed forms or external systems via APIs. In addition, the company offers Rooms for Real Estate that provides a way for brokers and agents to manage the entire real estate transaction digitally. Signature and CLM are FedRAMP, an authorized version of DocuSign eSignature for U.S. federal government agencies; and life sciences modules that support compliance with the electronic signature practices. The company sells its products through direct and partner-assisted sales, and digital self-service purchasing. DocuSign, Inc. was incorporated in 2003 and is headquartered in San Francisco, California.

About Freshworks

Freshworks Inc., a software development company, provides software-as-a-service products worldwide. It offers Freshworks Customer Service Suite, which provides automated, personalized self-service on various channels, including web, chat, mobile messaging, email, and social; Freshdesk, a ticketing-centric customer service solution; Freshsuccess, a customer success solution; and Freshchat that provides agents with a modern conversational experience to proactively engage customers across digital messaging channels. The company also provides Freshsales, an advanced and user-friendly sales automation solution; Freshmarketer, a marketing automation solution for businesses to redefine their marketing strategies; Freshsales Suite, which offers businesses a unified platform that facilitates cohesive engagement and detailed tracking of customers throughout their entire buying journey; Freshservice that offers virtual agents to help employees resolve issues, make requests, and answer questions without contacting the service desk; and Freshservice for Business Teams, which provides a unified employee service experience while ensuring the secure separation of departmental data. In addition, it offers Freshping to monitor website’s availability and get multichannel alerts if the website goes down; Freshstatus, which allows businesses to create a custom branded website status page for internal or external viewing to communicate website uptime and availability; and Freshsurvey to measure net promoter scores and other satisfaction metrics directly within Freshworks products. The company was formerly known as Freshdesk Inc. and changed its name to Freshworks Inc. in June 2017. Freshworks Inc. was incorporated in 2010 and is headquartered in San Mateo, California.