Critical Review: Bandwidth (NASDAQ:BAND) & Tuya (NYSE:TUYA)

Bandwidth (NASDAQ:BAND) and Tuya (NYSE:TUYA) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

68.5% of Bandwidth shares are held by institutional investors. Comparatively, 11.5% of Tuya shares are held by institutional investors. 6.2% of Bandwidth shares are held by insiders. Comparatively, 2.1% of Tuya shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Bandwidth and Tuya, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bandwidth	1	2	5	0	2.50
Tuya	0	0	0	0	0.00

Bandwidth presently has a consensus target price of $28.33, suggesting a potential upside of 75.11%. Given Bandwidth’s stronger consensus rating and higher possible upside, equities analysts clearly believe Bandwidth is more favorable than Tuya.

Volatility & Risk

Bandwidth has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, Tuya has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares Bandwidth and Tuya’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bandwidth	-0.87%	0.53%	0.16%
Tuya	-5.55%	-0.58%	-0.52%

Earnings and Valuation

This table compares Bandwidth and Tuya”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bandwidth	$748.49 million	0.59	-$6.52 million	($0.57)	-28.39
Tuya	$280.97 million	7.01	-$60.31 million	($0.03)	-122.83

Bandwidth has higher revenue and earnings than Tuya. Tuya is trading at a lower price-to-earnings ratio than Bandwidth, indicating that it is currently the more affordable of the two stocks.

Summary

Bandwidth beats Tuya on 12 of the 14 factors compared between the two stocks.

About Bandwidth

Bandwidth is a leading enterprise cloud communications company. Companies like Cisco, Google, Microsoft, RingCentral, Uber, and Zoom use Bandwidth’s APIs to easily embed voice, messaging, and emergency services into software and applications. Bandwidth is the first and only CPaaS provider offering a robust selection of communications APIs built around their own IP voice network.

About Tuya

Tuya Inc. offers purpose-built Internet of Things (IoT) cloud development platform in the People's Republic of China and internationally. The company provides platform-as-a-service that enables business, original equipment manufacturers, brands, and developers to develop, launch, manage, and monetize software-enabled smart devices and services; and industry software-as-a-service, which enables businesses to deploy, connect, and manage various types of smart devices. It also offers cloud-based software value-added services that provides end users with smart features, such as cloud storage; and Cube Smart Private Cloud Solution which enables conglomerates to build their own autonomous and controllable IoT platforms; and could-based services to businesses, developers, and end users to develop and manage IoT experiences. In addition, the company provides smart solutions for IoT devices that integrates software capabilities; and enables developers to activate an IoT ecosystem of brands, OEMs, partners, and end users to engage and communicate through a range of smart devices, as well as sells finished smart devices. It offers its solutions to smart home, smart business, renewable energy, education, agriculture, outdoors and sport, and entertainment industries. The company was incorporated in 2014 and is based in Hangzhou, the People's Republic of China.