Analyzing Yalla Group (NYSE:YALA) and Rackspace Technology (NASDAQ:RXT)

Yalla Group (NYSE:YALA) and Rackspace Technology (NASDAQ:RXT) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, valuation, earnings and profitability.

Volatility & Risk

Yalla Group has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Rackspace Technology has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Yalla Group and Rackspace Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yalla Group	0	0	0	0	N/A
Rackspace Technology	2	4	1	0	1.86

Rackspace Technology has a consensus target price of $2.15, suggesting a potential downside of 6.93%. Given Rackspace Technology’s higher probable upside, analysts plainly believe Rackspace Technology is more favorable than Yalla Group.

Insider and Institutional Ownership

4.7% of Yalla Group shares are held by institutional investors. Comparatively, 82.5% of Rackspace Technology shares are held by institutional investors. 52.2% of Yalla Group shares are held by insiders. Comparatively, 1.0% of Rackspace Technology shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Yalla Group and Rackspace Technology’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yalla Group	$326.04 million	1.94	$117.34 million	$0.70	5.70
Rackspace Technology	$2.83 billion	0.18	-$837.80 million	($3.96)	-0.58

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

Profitability

This table compares Yalla Group and Rackspace Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yalla Group	40.07%	22.50%	19.92%
Rackspace Technology	-28.79%	N/A	-1.55%

Summary

Yalla Group beats Rackspace Technology on 8 of the 13 factors compared between the two stocks.

About Yalla Group

Yalla Group Limited operates a social networking and gaming platform primarily in the Middle East and North Africa region. It provides mobile applications, including Yalla, a voice-centric group chat platform; and Yalla Ludo, a casual gaming application. The company's platform offers group chatting and games services; and sells virtual items, as well as provides upgrade services. The company was formerly known as FYXTech Corporation. Yalla Group Limited was founded in 2016 and is headquartered in Dubai, the United Arab Emirates.

About Rackspace Technology

Rackspace Technology, Inc. operates as a multi cloud technology services company in the Americas, Europe, the Middle East, Africa, and The Asia-Pacific region. It operates through three segments: Multicloud Services, Apps & Cross Platform, and OpenStack Public Cloud. The company provides public and private cloud managed services, which allow customers to determine, manage, and optimize the right infrastructure, platforms, and services; professional services related to designing and building multi cloud solutions and cloud-native applications; and managed hosting and colocation services. It also helps customers establish governance, operational, and architectural frameworks to mitigate risks and reduce inefficiencies to manage costs, achieve industry-specific compliance objectives, and enhance security. In addition, the company offers managed applications, including running large-scale SaaS applications for customers on its and public cloud infrastructure; managed security services in the areas of security threat assessment and prevention, threat detection and response, rapid remediation, governance, and risk and compliance assistance across multiple cloud platforms, as well as privacy and data protection services, including detailed access restrictions and reporting; data services; and professional services related to designing and implementing application, security, and data services. Rackspace Technology, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.