Reviewing Yalla Group (NYSE:YALA) & Rackspace Technology (NASDAQ:RXT)

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rackspace Technology	$2.83 billion	0.18	-$837.80 million	($3.96)	-0.58
Yalla Group	$326.04 million	1.99	$117.34 million	$0.70	5.84

Yalla Group has lower revenue, but higher earnings 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.

Risk & Volatility

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

Insider & Institutional Ownership

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

Profitability

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

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

Analyst Recommendations

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

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

Rackspace Technology currently has a consensus target price of $2.15, indicating a potential downside of 6.52%. Given Rackspace Technology’s higher possible upside, equities research analysts clearly believe Rackspace Technology is more favorable than Yalla Group.

Summary

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

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.

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.