Cloud computing has completely changed the software industry by providing scalable and affordable infrastructure. Cloud-based software solutions are being used by businesses in greater numbers to increase accessibility, save costs, and streamline operations. The global software market is expected to grow at a CAGR of 11.8% from 2024 to 2034.
Moreover, rising preferences for personalized and relevant content delivered are promoting marketing automation and AI-driven personalization tools within digital marketing software solutions. The global digital marketing software is expected to grow at a CAGR of 13.8% by 2032.
Against this backdrop, let’s compare two marketing software stocks to analyze which stock is better positioned for growth: Amdocs Limited (DOX) and HubSpot, Inc. (HUBS).
The Case for Amdocs Limited Stock
With a $9.96 billion market cap, Amdocs Limited (DOX) provides software and services worldwide. It designs, develops, operates, implements, supports, and markets open and modular cloud portfolios. The company provides CES23, a 5G and cloud-native microservices-based market-leading customer experience suite, that enables service providers to build, deliver, and monetize advanced services
DOX’s stock has gained 11.7% over the past nine months to close the last trading session at $86.58.
DOX’s forward EV/EBITDA of 9.36x is 34.1% lower than the industry average of 14.20x. Its forward EV/Sales multiple of 2.04 is 27.1% lower than the industry average of 2.80.
For the fiscal third quarter that ended June 30, 2024, DOX’s revenue grew marginally year-over-year to $1.25 billion. Its non-GAAP operating income increased 5.5% year-over-year to $232.39 million. DOX’s non-GAAP net income stood at $187.10 million or $1.62 per share, respectively.
Analysts expect DOX’s revenue for the fourth quarter (ending September 2024) to increase 1.7% year-over-year to $1.26 billion. Likewise, its EPS for the same quarter is projected to increase 19.8% year-over-year to $1.70.
DOX’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality and a B for Stability. DOX is ranked #2 out of 39 stocks in the B-rated Software - Business industry.
In addition to the POWR Ratings I’ve just highlighted, you can see DOX’s ratings for Growth, Momentum, Sentiment, and Value here.
The Case for HubSpot, Inc. Stock
Valued at $25.46 billion by market cap, HubSpot, Inc. (HUBS) provides a cloud-based customer relationship management (CRM) platform for businesses in the Americas, Europe, and the Asia Pacific.
HUBS’s stock has gained 2.3% over the past month to close the last trading session at $495.76.
HUBS’ forward EV/EBIT of 55.80x is 190.2% lower than the industry average of 19.23x. However, its forward EV/Sales of 9.52x is 240.1% higher than the industry average of 2.80x.
HUBS’ revenue for the fiscal second quarter ended June 30, 2024, increased 20.5% year-over-year to $637.23 million. In contrast, its net loss stood at $14.44 million and net loss per share at $0.28.
Analysts expect HUBS’ EPS for the quarter ending September 2024 to increase 20.1% year-over-year to $1.91, while its revenue for the same quarter is expected to increase 16.1% year-over-year to $647.11 million. It surpassed Street revenue and EPS estimates in each of the trailing quarters.
HUBS’ mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to Neutral in our proprietary rating system.
HUBS has a C grade for Stability and Momentum. It is ranked #20 among 39 stocks in the same industry.
Click here for the additional POWR Ratings for HUBS (Quality, Value, Sentiment, and Growth).
Amdocs Limited vs. HubSpot: Which Marketing Software Stock is Better Positioned for Growth?
Both enterprises and individuals now require software solutions for remote project management, video conferencing, and virtual collaboration. Apart from this, the rising preferences for personalized and relevant content delivered are promoting marketing automation and AI-driven personalization tools within digital marketing software solutions.
Leading marketing software companies DOX and HUBS stand to capitalize on the optimistic industry outlook. However, DOX’s strong financial performance and cheap valuation favor it as the better marketing software stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Software - Business industry here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
HUBS shares were trading at $493.67 per share on Wednesday afternoon, down $2.09 (-0.42%). Year-to-date, HUBS has declined -14.96%, versus a 17.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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