Domo vs. Teradata: Which Cloud Data Analytics Stock is a Better Buy?

San Diego, Calif.-based hybrid cloud analytics software provider Teradata Corporation’s (TDC) solutions and services comprise software, hardware, and related business consulting and support services. It offers primarily Teradata Vantage, an analytics platform. In comparison, Domo, Inc. (DOMO) in American Fork, Utah, operates a cloud-based platform in the United States. Its platform digitally connects the CEO and frontline employees with the people, data, and systems in an organization, giving them access to real-time data and insights to manage the business from smartphones.

Even though cloud-based service providers are vulnerable to cyber-attacks, governments and businesses have been spending billions of dollars on cloud-based services to facilitate the ongoing digital transformation and continued remote working. According to a Synergy Research Group report, cloud infrastructure spending reached $42 billion in the second quarter of 2021. Furthermore, the future looks promising for the cloud data analytics industry due to consistent advancements in the artificial intelligence (AI) and machine learning (ML) space and rapid deployment of 5G, among other factors. As a result, both TDC and DOMO are expected to benefit in the coming quarters.

DOMO’s shares have gained 36.4% in price over the last three months, while TDC has returned 11.6%. However, TDC’s 8.1% gains over the past month are higher than DOMO’s 2% returns. Moreover, TDC is the clear winner with 141.4% in price gains year-to-date versus DOMO’s 40.4%.

Click here to check out our Cloud Computing Industry Report for 2021

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On May 4, 2021, TDC announced a set of enhancements to  Teradata Vantage on Alphabet Inc.’s (GOOGL) Google Cloud, making it easier for its consumers to use the services. This could lead to increasing demand for the company’s services in the near term.

DOMO rolled out its new Domo Everywhere offering on June 8, 2021. The offering  updates components of its existing embedded analytics solutions. In addition, it makes available new capabilities to deliver a more robust experience so  organizations can improve customer experiences and create new revenue streams by leveraging its powerful platform.

Recent Financial Results

TDC’s revenue surged 7% year-over-year to $491 million for the second quarter, ended June 30, 2021. Its non-GAAP operating income grew 83% year-over-year to $117 million, while its non-GAAP net income increased 219% year-over-year to $83 million. Its non-GAAP EPS came in at $0.74, up 208.3% year-over-year.

DOMO’s revenue has gained 23% year-over-year to $62.80 million for its  fiscal second quarter, ended July 31, 2021. Its gross profit grew 24.1% year-over-year to $46.51 million, while its non-GAAP net loss decreased 10.3% year-over-year to $9.59 million. The company’s non-GAAP loss per share was  $0.30, down 18.9% year-over-year.

Expected Financial Performance

Analysts expect TDC’s revenue to increase 4.7% in its fiscal year 2021 and 3.4% in fiscal 2022. The company’s EPS is expected to grow 50.4% in fiscal 2021 and 3.6% in fiscal 2022.

In contrast,  DOMO’s revenue is expected to increase 19.4% in its fiscal year 2022 and 17.9% in fiscal 2023. Also, its EPS is expected to grow 22.5% in fiscal 2022 and 37.3% in fiscal 2023.

Profitability

TDC’s $1.93 billion trailing-12-month revenue is significantly higher than DOMO’s $233.38 million. TDC is also more profitable, with 8.73% and 5.24% respective EBITDA and net income margins, compared to DOMO’s negative returns.

Furthermore, TDC’s ROA and ROTC of 6.30% and 12.67%, respectively, compare favorably with DOMO’s negative returns.

Valuation

In terms of forward non-GAAP EV/S, DOMO is currently trading at 11.28x, which is 267.4% higher than TDC’s 3.07x.

So, TDC is the more affordable stock.

POWR Ratings

TDC has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. In comparison,  DOMO has an overall C rating, which translates to Neutral. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

TDC has an A grade for Value, which is consistent with its 14.55x forward P/CF, which is 36.6% lower than the 22.94x industry average. However, DOMO has a D grade for Value, in sync with its 526.65x forward P/CF, which is 2,196% higher than the 22.94x industry average.

TDC also has an A  grade  for Growth, which is consistent with analysts’ expectations that its EPS will increase significantly in its fiscal year 2021. In comparison,  DOMO has a Growth grade of C, which is consistent with analysts’ expectations that its EPS will remain negative this year.

Of the three stocks in the A-rated Technology - Storage industry, TDC is ranked #1. However, DOMO is ranked #36 of 61 stocks in the D-rated Software - Business industry.

Beyond what we’ve stated above, we have also rated the stocks for Quality, Stability, Momentum, and Sentiment. Click here to view all the TDC ratings. Also, get all the DOMO ratings here.

The Winner

The cloud data analytics industry is expected to perform well due to the increasing prevalence of remote working and the continued digital transformation. While both TDC and DOMO are expected to gain in the long run, we think it is better to bet on TDC now because of its relatively lower valuation, higher profitability, and better financials.

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 Technology - Storage industry here. Also, click here to access all the top-rated stocks in the Software - Business industry.

Click here to check out our Cloud Computing Industry Report for 2021

TDC shares were trading at $54.36 per share on Monday afternoon, up $0.12 (+0.22%). Year-to-date, TDC has gained 141.92%, versus a 21.88% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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