A10 Networks, Inc. (ATEN) and CuriosityStream Inc. (CURI) are two prominent small-cap growth stocks. With a market capitalization of $896.32 million, ATEN is engaged in the development of on-premises and cloud-native DDoS protection, network traffic management, and cybersecurity solutions for cloud providers, web-scale businesses, service providers, government organizations, and enterprises.
CURI is a factual streaming service and media company. The company provides premium video programming services in various categories of factual entertainment. The market capitalization of CURI stands at $768.52 million.
With the US economy recovering at a fast pace, industrial and manufacturing activities are on the rise, which is driving the recovery in the job market. Small-cap stocks have been making a solid comeback in this scenario thanks in part to the government’s stimulus for small and medium sized businesses (SMBs), and easy access to cheap capital amid the low interest rate environment.
Investors’ increasing interest in small-cap stocks is evident from the SPDR S&P 600 Small Cap ETF’s (SLY) 22.4% return over the past six months compared to the large-cap focused SPDR S&P 500 ETF Trust’s (SPY) 16% gain.
While ATEN has gained 17.6% year-to-date, CURI has returned 4.8%. Furthermore, in terms of past three months’ performance, ATEN is a clear winner with a 19% return versus CURI’s 9.3%. But which of these two stocks is a better pick now? Let’s find out.
ATEN’s DDoS protection solution and other new customer-oriented product solutions have enabled the company to witness a dramatic increase in its customer base from businesses, service providers, and government organizations, amid the adoption of IoT devices, gaming and streaming services, and cybersecurity over the past year. ATEN’s continued provision of secure and efficient services is likely to help them capitalize on the rollout of 5G services beginning this year.
On May 11, 2021, CURI acquired One Day University, a New York-based education program that brings professors from top universities to present their most interesting lectures in a live setting. This acquisition enhances CURI’s offering of premium factual content and provides additional long-term revenue and promotional opportunities in this era of digital learning and edutainment services.
Recent Financial Results
ATEN’s revenue increased 2% year-over-year to $54.84 million for the first quarter that ended March 31, 2021. Its non-GAAP net income came in at $9.44 million, up 134.7% year-over-year. Its non-GAAP EPS came in at $0.12, up 140% year-over-year.
For the first quarter that ended March 31, 2021, CURI’s sales came in at $9.94 million, which represents a 33.1% increase from the prior-year quarter. However, the company’s total comprehensive loss came in at $19.21 million for the quarter, up 57.4% from the prior-year period. Its loss per share decreased 68% year-over-year to $0.39.
Past and Expected Financial Performance
ATEN’s revenue grew 4.9% over the past year, and is expected to increase 8.6% year-over-year for the current quarter ending September 30, 2021, 6.8% in the current year, and 7.1% next year. Its EPS is expected to decline 2.3% for the current quarter, but increase 20.2% both in the current year and next year. Moreover, its EPS is expected to grow at a rate of 23% per annum over the next five years.
On the other hand, CURI’s revenue grew 86.9% over the past year, and is expected to increase 121.2% for the current quarter ending September 30, 2021, 79.1% in the current year, and 73.6% next year. The company’s EPS is expected to remain negative in the current year. Also, CURI’s EPS is expected to decline by 133.3% rate per annum over the next five years.
ATEN’s trailing-12-month revenue of $226.61 million is 5.4 times what CURI generates. Moreover, ATEN is more profitable with a net income margin of 9.2% versus CURI’s negative value.
Also, ATEN’s ROE and EBITDA margin of 17.5% and 14.3% compare favorably with CURI’s negative values.
In terms of forward EV/Sales, CURI is currently trading at 9.47x, 198.7% higher than ATEN’s 3.17x. In terms of trailing-12-month Price/Sales as well, CURI’s 9.61x is 142.7% higher than ATEN’s 3.96x.
So, ATEN is the more affordable stock.
CURI has an overall grade of F which equates to a Strong Sell rating in our proprietary POWR Ratings system. However, ATEN has an overall grade of B which represents a Buy rating. The POWR Ratings are calculated by taking into account 118 different factors with the weighting of each optimized to improve overall performance.
CURI has a F grade for Quality. This is justified as its trailing-12-month return on total assets are negative compared to the industry average of 1.9%. ATEN’s A grade for Quality is in sync with its higher-than-industry profitability ratios. Its 7.1% trailing-12-month return on total assets is 121.4% higher than the industry average of 3.22%.
CURI has a grade of F for Value as well. This is in keeping with its forward EV/Sales of 9.47x, which is 237.6% higher than the industry average of 2.80x. ATEN has a grade of B for Value, which is consistent with its forward EV/Sales of 3.17x, 25.6% lower than the industry average of 4.26x.
In addition to the POWR Ratings grades I’ve just highlighted, we have also graded both CURI and ATEN for Growth, Sentiment, Momentum, and Stability as well. Click here to see the additional ratings for CURI. Also, get all of ATEN’s ratings here.
While small-cap stocks are expected to witness solid growth in upcoming months, ATEN seems to be a better bet in this space based on its relatively cheaper valuation and higher profitability.
Our research shows that the odds of success increase if you bet on stocks with an overall rating of Buy or Strong Buy. Click here to learn about top-rated stocks in the Entertainment-Media Producers industry. Also, click here to see other top-rated stocks in the Technology-Communication/Networking industry.
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ATEN shares were trading at $11.58 per share on Tuesday morning, down $0.01 (-0.09%). Year-to-date, ATEN has gained 17.44%, versus a 16.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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|CURI||Get Rating||Get Rating||Get Rating|