Fastly (NYSE:FSLY) vs. StoneCo (NASDAQ:STNE) Critical Comparison

StoneCo (NASDAQ:STNE) and Fastly (NYSE:FSLY) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Analyst Recommendations

This is a breakdown of current ratings for StoneCo and Fastly, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StoneCo	1	1	7	2	2.91
Fastly	0	9	1	0	2.10

StoneCo currently has a consensus target price of $15.36, suggesting a potential downside of 11.23%. Fastly has a consensus target price of $8.69, suggesting a potential upside of 17.00%. Given Fastly’s higher possible upside, analysts plainly believe Fastly is more favorable than StoneCo.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StoneCo	$2.46 billion	2.01	-$280.92 million	($0.70)	-24.71
Fastly	$543.68 million	2.01	-$158.06 million	($1.03)	-7.21

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

Insider and Institutional Ownership

73.2% of StoneCo shares are owned by institutional investors. Comparatively, 79.7% of Fastly shares are owned by institutional investors. 11.3% of StoneCo shares are owned by company insiders. Comparatively, 6.7% of Fastly shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares StoneCo and Fastly’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
StoneCo	-8.37%	18.71%	4.36%
Fastly	-25.85%	-11.98%	-7.87%

Volatility and Risk

StoneCo has a beta of 1.91, meaning that its share price is 91% more volatile than the S&P 500. Comparatively, Fastly has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.

Summary

StoneCo beats Fastly on 10 of the 15 factors compared between the two stocks.

About StoneCo

StoneCo Ltd. provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and sells solutions to brick-and-mortar and digital merchants through sales team. The company served small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands.

About Fastly

Fastly, Inc. operates an edge cloud platform for processing, serving, and securing its customer's applications in the United States, the Asia Pacific, Europe, and internationally. The edge cloud is a category of Infrastructure as a Service that enables developers to build, secure, and deliver digital experiences at the edge of the internet. The company offers network services to speed up and optimize the delivery of web and application traffic; device detection and geolocation; content delivery network, such as dynamic site acceleration, origin shield, instant purge, surrogate keys, programmatic control, content compression, reliability features, fanout, domainr, privacy, and modern protocols and performance services; and video/ streaming solutions and services, including live streaming, video on demand, and media shield. It also provides security solutions, such as DDoS protection, next-gen WAF, bot management, API and ATO protection, advanced rate limiting, and compliance services; load balancing; image optimization; transport layer security (TLS), platform TLS, and certainly; and origin connect. It serves customers operating in digital publishing, media and entertainment, technology, online education, travel and hospitality, and financial services industries. The company was formerly known as SkyCache, Inc. and changed its name to Fastly, Inc. in May 2012. Fastly, Inc. was incorporated in 2011 and is headquartered in San Francisco, California.