Head to Head Analysis: Gigamon (GIMO) and Red Hat (RHT)

Gigamon (NYSE: GIMO) and Red Hat (NYSE:RHT) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitability.

Profitability

This table compares Gigamon and Red Hat’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gigamon -0.32% -0.55% -0.38%
Red Hat 11.49% 25.27% 7.43%

Analyst Ratings

This is a breakdown of recent recommendations for Gigamon and Red Hat, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gigamon 0 9 1 0 2.10
Red Hat 1 8 22 0 2.68

Gigamon presently has a consensus target price of $45.35, indicating a potential upside of 17.79%. Red Hat has a consensus target price of $123.21, indicating a potential upside of 0.99%. Given Gigamon’s higher possible upside, equities analysts plainly believe Gigamon is more favorable than Red Hat.

Institutional & Insider Ownership

96.6% of Gigamon shares are owned by institutional investors. Comparatively, 93.6% of Red Hat shares are owned by institutional investors. 4.5% of Gigamon shares are owned by company insiders. Comparatively, 0.7% of Red Hat shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Gigamon has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, Red Hat has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Valuation & Earnings

This table compares Gigamon and Red Hat’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gigamon $310.86 million 4.62 $49.43 million ($0.04) -962.50
Red Hat $2.41 billion 9.02 $253.70 million $1.66 73.49

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

Summary

Red Hat beats Gigamon on 9 of the 13 factors compared between the two stocks.

Gigamon Company Profile

Gigamon Inc. offers a solution that delivers visibility and control of data-in-motion traversing enterprise, federal and service provider networks. The Company’s Visibility Platform consists of a distributed system of nodes (that in combination establish a Visibility Fabric). The Visibility Platform includes physical appliances and virtual nodes that can be deployed in data centers, central offices, virtualized/private cloud/public cloud environments, and small form-factor remote site appliances, which in combination enable pervasive visibility of network infrastructures. Its GigaSECURE Security Delivery Platform enables security teams and information technology (IT) personnel to gain visibility into their IT infrastructure by forwarding selected traffic of interest from network, server and remote location infrastructure to security, management, analysis and compliance tools in a manner that is optimized for specific uses or functions.

Red Hat Company Profile

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

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