At a market cap of just $3.5 billion, PagerDuty (PD 3.34%) is one of the smaller cloud stocks you'll find, and at a price-to-sales valuation of 15, it's cheaper than many of its competitors, including Datadog.

But does that make it a buy? In this episode of "The Five," recorded on Sept. 3, Fool contributors Jeremy Bowman and Brian Withers discuss how PagerDuty stacks up following its second-quarter earnings report.

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Brian Withers: I saw a question over here, well, a question or a comment from Curmudgeon on PagerDuty. Jeremy, you didn't tell me this, so I'm upset. [laughs]

Jeremy Bowman: I wanted to get to that actually, but we were on the online argument.

Withers: Yeah, go ahead. I want to steal your thunder.

Bowman: I think he much makes a good point, PagerDuty has a much smaller market cap than some of these companies we were talking about on Beat and Raise with only about four billion dollars. I think partly that's a reflection that the business is smaller. I think as I was talking about, maybe there's signs that it could be potentially exhausted or it might be running out of new customers to add with the majority of the Fortune 100 already in its business. Its valuation is smaller than some of its peers and it's still trading for price to sales of 15, which for cloud stocks is pretty low, for the market in general is pretty high. I think in some ways it does leave some runway for growth, especially if we see it rolling out some new products. Really if we see that net retention rate remain high and are even growing. I think that's a very great sign for it to be multi-bagging stock.

Withers: Yes. Let's compare PagerDuty at a four billion market cap. Do you happen to know what Datadog's market cap is?

Bowman: Pretty sure it's a lot higher, [laughs] yes.

Withers: It's like 10 times higher, 10 times. They're going after a little bit of the same market. Both Datadog and PagerDuty talk about observability and being proactive and getting insights from your network and what's going on. It's a massive market. Datadog's price of sales is 55. You just said PagerDuty is 15. Yeah, that's an interesting one.