ServiceSource International (NASDAQ: SREV) and CSG Systems International (NASDAQ:CSGS) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, valuation, risk, dividends and institutional ownership.

Profitability

This table compares ServiceSource International and CSG Systems International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ServiceSource International -13.85% -5.65% -2.35%
CSG Systems International 8.03% 27.58% 8.29%

Risk & Volatility

ServiceSource International has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, CSG Systems International has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for ServiceSource International and CSG Systems International, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ServiceSource International 0 1 1 0 2.50
CSG Systems International 0 0 1 0 3.00

ServiceSource International presently has a consensus target price of $8.00, suggesting a potential upside of 113.33%. CSG Systems International has a consensus target price of $47.00, suggesting a potential upside of 14.36%. Given ServiceSource International’s higher probable upside, research analysts clearly believe ServiceSource International is more favorable than CSG Systems International.

Dividends

CSG Systems International pays an annual dividend of $0.79 per share and has a dividend yield of 1.9%. ServiceSource International does not pay a dividend. CSG Systems International pays out 42.0% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares ServiceSource International and CSG Systems International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ServiceSource International $249.85 million 1.33 -$7.45 million ($0.40) -9.38
CSG Systems International $767.20 million 1.74 $152.38 million $1.88 21.86

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

Insider and Institutional Ownership

67.2% of ServiceSource International shares are owned by institutional investors. Comparatively, 94.7% of CSG Systems International shares are owned by institutional investors. 30.3% of ServiceSource International shares are owned by insiders. Comparatively, 2.6% of CSG Systems International shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

CSG Systems International beats ServiceSource International on 10 of the 14 factors compared between the two stocks.

ServiceSource International Company Profile

ServiceSource International, Inc. (ServiceSource) is a provider of customer and revenue lifecycle solutions that power enterprise revenue relationships, partnering with business to business technology and technology-enabled companies. The Company operates through two segments: Managed Services, and Cloud and Business Intelligence (CBI). The Company delivers through service teams and integral cloud-based technologies from its database of service. By integrating managed services, cloud software and data, the Company provides its clients with insights into their end customers businesses, end-to-end management and service-contract renewals process. As of December 31, 2016, it managed approximately 143 engagements across 66 clients. Its solutions are designed to optimize recurring revenue across various revenue models, distribution models and segments, including hardware, software, Software-as-a-Service (SaaS), industrial systems, technology-enabled healthcare and life sciences.

CSG Systems International Company Profile

CSG Systems International, Inc. (CSG) is a provider of business support solutions primarily serving the communications industry. The Company provides business support solutions (BSS) to the communications service providers (CSPs), as well as clients in various industries. CSG’s solutions coordinate and manage various aspects of a service provider’s customer interactions, from the initial activation of customer accounts, to the support and fulfillment of various services, and through the calculation, presentment, and accounts receivables management of monthly customer statements. The Company’s primary product solutions include Revenue Management & Customer Experience Solutions; Customer Interaction Management; Managed Services; Mediation and Data Management, and Wholesale Settlement and Routing. The Company employs professional services across various sectors, including solution architecture, project management, systems implementation and business consultancy.

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