Performant Financial Corporation (NASDAQ: PFMT) and Lifelock (NYSE:LOCK) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Volatility & Risk

Performant Financial Corporation has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Lifelock has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Performant Financial Corporation and Lifelock, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Performant Financial Corporation 0 1 0 0 2.00
Lifelock 1 3 0 0 1.75

Lifelock has a consensus price target of $24.00, suggesting a potential upside of 0.04%. Given Lifelock’s higher possible upside, analysts plainly believe Lifelock is more favorable than Performant Financial Corporation.

Earnings and Valuation

This table compares Performant Financial Corporation and Lifelock’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Performant Financial Corporation $134.02 million 0.69 $6.52 million ($0.36) -5.06
Lifelock N/A N/A N/A $0.17 141.12

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

Profitability

This table compares Performant Financial Corporation and Lifelock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Performant Financial Corporation -13.74% -6.81% -3.17%
Lifelock 8.46% 24.53% 10.96%

Insider & Institutional Ownership

54.8% of Performant Financial Corporation shares are owned by institutional investors. Comparatively, 88.8% of Lifelock shares are owned by institutional investors. 33.6% of Performant Financial Corporation shares are owned by insiders. Comparatively, 13.9% of Lifelock shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Lifelock beats Performant Financial Corporation on 7 of the 10 factors compared between the two stocks.

About Performant Financial Corporation

Performant Financial Corporation (Performant) provides technology-enabled recovery and related analytics services in the United States. The Company’s services identify and recover delinquent or defaulted assets and improper payments for both government and private clients in a range of markets. The Company provides its services on an outsourced basis where the Company handles many or all aspects of its clients’ recovery processes. The Company uses its technology-enabled services platform to provide recovery and analytics services in a range of markets for the identification and recovery of student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. It provides recovery services to the government-supported student loan industry and its clients include the Department of Education and Guaranty Agencies, as well as private financial institutions. The Company provides recovery services related to improper payments in the healthcare market.

About Lifelock

LifeLock, Inc. provides proactive identity theft protection services for consumers and consumer risk management services for enterprises. The Company monitors certain identity-related events, such as new account openings and credit-related applications. It operates in two segments: consumer segment and an enterprise segment. The Company’s LifeLock ecosystem combines data repositories of personally identifiable information and consumer transactions, predictive analytics and a technology platform. It applies predictive analytics to the data in its repositories to provide its members and enterprise customers’ actionable intelligence that helps protect against identity theft and identity fraud. It offers its consumer services on a monthly or annual subscription basis. It provides consumer risk management services, including delivering its on-demand identity risk, identity-authentication and credit information about consumers to its enterprise customers in the daily transaction flows.

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