American Software (NASDAQ: AMSWA) and QAD (NASDAQ:QADB) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Profitability

This table compares American Software and QAD’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Software 14.81% 15.78% 11.15%
QAD -5.98% -0.48% -0.21%

Risk & Volatility

American Software has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, QAD has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for American Software and QAD, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Software 0 0 1 0 3.00
QAD 0 0 1 0 3.00

American Software presently has a consensus price target of $12.25, suggesting a potential upside of 15.57%. QAD has a consensus price target of $33.00, suggesting a potential upside of 17.77%. Given QAD’s higher possible upside, analysts plainly believe QAD is more favorable than American Software.

Dividends

American Software pays an annual dividend of $0.44 per share and has a dividend yield of 4.2%. QAD pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. American Software pays out 84.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. QAD pays out -25.5% of its earnings in the form of a dividend.

Institutional and Insider Ownership

74.7% of American Software shares are held by institutional investors. Comparatively, 1.8% of QAD shares are held by institutional investors. 13.9% of American Software shares are held by company insiders. Comparatively, 67.4% of QAD shares are held by company 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.

Valuation & Earnings

This table compares American Software and QAD’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Software $105.74 million 2.98 $12.37 million $0.52 20.39
QAD $290.14 million 1.85 $10.69 million ($0.94) -29.81

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

Summary

American Software beats QAD on 8 of the 13 factors compared between the two stocks.

American Software Company Profile

American Software, Inc. (American Software) develops, markets and supports a portfolio of software and services that delivers enterprise management, supply chain and retail planning solutions to the marketplace. The Company operates through three business segments: Supply Chain Management (SCM), Enterprise Resource Planning (ERP) and Information Technology (IT) Consulting. The SCM segment consists of Logility, Inc. and its subsidiary, Demand Management, Inc. (DMI), both of which provide supply chain and retail planning solutions to trading partners. The ERP segment consist of American Software ERP, which provides business software for manufacturers and distributors, and New Generation Computing, Inc. (NGC), which provides industry-specific business software to both retailers and manufacturers in the apparel, footwear, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, Inc., an IT staffing and consulting services firm.

QAD Company Profile

QAD Inc. (QAD) is a provider of vertically oriented enterprise software solutions for global manufacturing companies across the automotive, life sciences, consumer products, food and beverage, high technology and industrial products industries. QAD Enterprise Applications enables measurement and control of business processes and supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD delivers components of its solution for a range of mobile platforms. The Company’s mobile suite includes a requisition approval solution, a mobile business intelligence solution, mobile browse capability and mobile application monitoring tools to support system administrators. Its mobile browse capability allows users to view, filter and sort data accessible through QAD Browses within QAD Enterprise Applications using mobile devices.

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