LegalZoom.com (NASDAQ:LZ – Get Free Report) and Five9 (NASDAQ:FIVN – Get Free Report) are both industrial products companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.
Risk and Volatility
LegalZoom.com has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Five9 has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.
Profitability
This table compares LegalZoom.com and Five9’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| LegalZoom.com | 3.61% | 32.88% | 9.31% |
| Five9 | -3.66% | -1.53% | -0.44% |
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| LegalZoom.com | $660.73 million | 2.05 | $13.95 million | $0.13 | 60.24 |
| Five9 | $910.49 million | 3.33 | -$81.76 million | ($0.50) | -80.64 |
LegalZoom.com has higher earnings, but lower revenue than Five9. Five9 is trading at a lower price-to-earnings ratio than LegalZoom.com, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 96.6% of Five9 shares are held by institutional investors. 10.5% of LegalZoom.com shares are held by insiders. Comparatively, 1.8% of Five9 shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Analyst Recommendations
This is a summary of current ratings and target prices for LegalZoom.com and Five9, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| LegalZoom.com | 2 | 5 | 1 | 0 | 1.88 |
| Five9 | 0 | 5 | 14 | 0 | 2.74 |
LegalZoom.com currently has a consensus target price of $8.67, suggesting a potential upside of 10.69%. Five9 has a consensus target price of $59.22, suggesting a potential upside of 46.88%. Given Five9’s stronger consensus rating and higher possible upside, analysts clearly believe Five9 is more favorable than LegalZoom.com.
Summary
LegalZoom.com beats Five9 on 8 of the 14 factors compared between the two stocks.
About LegalZoom.com
LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.
About Five9
Five9, Inc., together with its subsidiaries, provides intelligent cloud software for contact centers in the United States, India, and internationally. It offers a virtual contact center cloud platform that delivers a suite of applications, which enables the breadth of contact center-related customer service, sales, and marketing functions. The company’s platform comprises of including interactive virtual agent, agent assist, workflow automation, workforce engagement management, AI insights, and AI summaries that allows to manage and optimize customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces. It also matches each customer interaction with an agent resource and delivers customer data to the agent in real-time through integrations with adjacent enterprise applications, such as CRM software, to optimize the customer experience and enhance agent productivity. The company serves customers in various industries, such as banking and financial services, business process outsourcers, retail, healthcare, technology, and education. Five9, Inc. was incorporated in 2001 and is headquartered in San Ramon, California.
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