Evolving Systems (NASDAQ: EVOL) and Smith Micro Software (NASDAQ:SMSI) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitabiliy, risk and institutional ownership.

Volatility & Risk

Evolving Systems has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500. Comparatively, Smith Micro Software has a beta of 0.09, suggesting that its share price is 91% less volatile than the S&P 500.

Earnings and Valuation

This table compares Evolving Systems and Smith Micro Software’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Evolving Systems $24.17 million 2.55 $7.73 million $0.34 14.56
Smith Micro Software $26.60 million 0.49 -$12.14 million ($1.07) -1.01

Evolving Systems has higher revenue, but lower earnings than Smith Micro Software. Smith Micro Software is trading at a lower price-to-earnings ratio than Evolving Systems, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

30.2% of Evolving Systems shares are held by institutional investors. Comparatively, 14.7% of Smith Micro Software shares are held by institutional investors. 10.2% of Evolving Systems shares are held by insiders. Comparatively, 22.0% of Smith Micro Software shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Evolving Systems and Smith Micro Software’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Evolving Systems 16.47% 15.29% 10.19%
Smith Micro Software -49.02% -222.45% -54.76%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Evolving Systems and Smith Micro Software, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Evolving Systems 0 0 0 0 N/A
Smith Micro Software 0 0 0 0 N/A

Summary

Evolving Systems beats Smith Micro Software on 8 of the 10 factors compared between the two stocks.

About Evolving Systems

Evolving Systems, Inc. is a provider of software solutions for service enablement, on-device activation and management of services for connected devices for network operators. The Company operates in two segments: license fees and services revenue, and customer support revenue. Its service activation solution, Tertio is used to activate voice, video and data services for wireless, wireline and cable network operators. Its Subscriber Identity Module (SIM) card activation solution, Dynamic SIM Allocation is used to allocate and assign resources to Mobile Network Operators devices that rely on SIM cards. Its Mobile Data Enablement solution provides a data consumption and policy management solution for wireless carriers and Mobile Virtual Network Operators that monitor the usage and consumption of data services. Its Total Number Management product is an automated database solution that enables operators to manage their telephone numbers, as well as other communication identifiers.

About Smith Micro Software

Smith Micro Software, Inc. is a provider of software solutions. The Company operates through two segments: Wireless and Graphics. The Company offers multi-platform, modular solutions organized into three product families, including NetWise, CommSuite and QuickLink. For mobile network operators, NetWise helps reduce cellular congestion and optimize data traffic across third-generation (3G), fourth-generation (4G) and wireless fidelity (Wi-Fi) networks. Graphics segment includes its consumer-based products, such as Poser, Anime Studio, Manga Studio, MotionArtist and StuffIt. The Graphics segment develops a range of software, including graphic design and animation, compression and personal computer (PC)/Mac utilities, for consumers, professional artists and educators. The Company also offers Family Safety platform for family locator and parental controls.

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