Actua Corporation (NASDAQ: ACTA) and ServiceSource International (NASDAQ:SREV) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.

Volatility & Risk

Actua Corporation has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500. Comparatively, ServiceSource International has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Actua Corporation 67.78% -5.42% -4.26%
ServiceSource International -17.26% -3.70% -1.50%

Valuation & Earnings

This table compares Actua Corporation and ServiceSource International’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Actua Corporation $118.96 million 3.16 -$22.10 million $2.15 5.64
ServiceSource International $246.14 million 1.34 -$6.57 million ($0.49) -7.55

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

Analyst Recommendations

This is a breakdown of recent ratings for Actua Corporation and ServiceSource International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Actua Corporation 0 0 1 0 3.00
ServiceSource International 0 1 0 0 2.00

Actua Corporation presently has a consensus price target of $17.00, suggesting a potential upside of 40.21%. ServiceSource International has a consensus price target of $5.00, suggesting a potential upside of 35.14%. Given Actua Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Actua Corporation is more favorable than ServiceSource International.

Institutional and Insider Ownership

73.4% of Actua Corporation shares are held by institutional investors. Comparatively, 68.0% of ServiceSource International shares are held by institutional investors. 10.2% of Actua Corporation shares are held by company insiders. Comparatively, 30.3% of ServiceSource International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Actua Corporation beats ServiceSource International on 8 of the 13 factors compared between the two stocks.

Actua Corporation Company Profile

Actua Corporation, formerly ICG Group, Inc., is a multi-vertical cloud technology company. The Company operates through two segments, which include the vertical cloud segment and the vertical cloud (venture) segment. The Company’s vertical cloud-based businesses include Bolt Solutions Inc. (Bolt), Folio Dynamics Holdings Inc. (FolioDynamix), GovDelivery Holdings, Inc. (GovDelivery) and VelocityEHS Holdings, Inc. (VelocityEHS), which operate in the commercial and personal property and casualty insurance, wealth management, government communications and environmental, health and safety (EH&S) markets, respectively. The vertical cloud (venture) businesses include InstaMed Holdings, Inc. (InstaMed) and Parchment Inc. (Parchment), which operate a cloud-based healthcare payments network and an education credentials technology, respectively.

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.

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