Liberty Tax (NASDAQ: TAX) and Regis Corporation (NYSE:RGS) are both small-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitabiliy, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Liberty Tax and Regis Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Liberty Tax 7.48% 16.84% 6.69%
Regis Corporation -0.69% -0.01% N/A

Valuation and Earnings

This table compares Liberty Tax and Regis Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Liberty Tax $173.99 million 1.00 $37.68 million $0.83 15.06
Regis Corporation $1.72 billion 0.27 $71.85 million ($0.26) -38.73

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

Dividends

Liberty Tax pays an annual dividend of $0.64 per share and has a dividend yield of 5.1%. Regis Corporation does not pay a dividend. Liberty Tax pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Liberty Tax has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, Regis Corporation has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500.

Institutional and Insider Ownership

45.3% of Liberty Tax shares are owned by institutional investors. Comparatively, 96.4% of Regis Corporation shares are owned by institutional investors. 46.8% of Liberty Tax shares are owned by company insiders. Comparatively, 24.0% of Regis Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Liberty Tax and Regis Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty Tax 0 0 0 0 N/A
Regis Corporation 0 0 0 0 N/A

Summary

Liberty Tax beats Regis Corporation on 7 of the 12 factors compared between the two stocks.

Liberty Tax Company Profile

Liberty Tax, Inc. is the holding company for JTH Tax, Inc. The Company is a provider of tax preparation services. The Company provides retail federal and state income tax preparation services and related tax settlement products in the United States and Canada. The Company’s tax preparation services and related tax settlement products are offered primarily through franchised locations. All of the Company’s offices are operated under the Liberty Tax Service and SiempreTax+ brands. The Company also provides an online digital Do-It-Yourself (DIY) tax program in the United States. The Company offers two types of tax settlement financial products: refund transfer products, which include providing a means by which a customer receives his or her refund, and refund-based loans. The Company’s LibTax software allows tax customers to have their federal and state income tax returns filed electronically.

Regis Corporation Company Profile

Regis Corporation owns, franchises and operates beauty salons. The Company operates through three segments: North American Value, North American Premium and International. As of June 30, 2016, the Company’s North American Value salon operations consisted of 5,784 Company-owned salons and 2,496 franchised salons operating in the United States, Canada and Puerto Rico. As of June 30, 2016, the Company’s North American Premium salon operations consisted of 680 Company-owned salons operating in the United States, Canada, and Puerto Rico. As of June 30, 2016, the Company’s International operations consisted of 328 Company-owned salons in the United Kingdom. The services supplied by its salons include haircutting and styling, hair coloring and other services. As of June 30, 2016, it owned, franchised or held ownership interests in 9,483 locations around the world. The Company’s salons operate primarily under the trade names of SmartStyle, Supercuts, MasterCuts, Regis Salons and Cost Cutters.

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