Computer Programs and Systems (NASDAQ: CPSI) and Liquidity Services (NASDAQ:LQDT) are both small-cap medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Insider & Institutional Ownership

67.6% of Liquidity Services shares are held by institutional investors. 3.7% of Computer Programs and Systems shares are held by company insiders. Comparatively, 22.3% of Liquidity Services shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Computer Programs and Systems and Liquidity Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Computer Programs and Systems 2.08% 9.59% 4.43%
Liquidity Services -27.52% -16.59% -10.35%

Valuation & Earnings

This table compares Computer Programs and Systems and Liquidity Services’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Computer Programs and Systems $260.96 million 1.47 $28.51 million $0.40 71.38
Liquidity Services $287.16 million 0.64 -$24.12 million ($2.55) -2.27

Computer Programs and Systems has higher revenue, but lower earnings than Liquidity Services. Liquidity Services is trading at a lower price-to-earnings ratio than Computer Programs and Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for Computer Programs and Systems and Liquidity Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Computer Programs and Systems 1 5 1 0 2.00
Liquidity Services 0 1 0 0 2.00

Computer Programs and Systems presently has a consensus target price of $28.00, suggesting a potential downside of 1.93%. Given Computer Programs and Systems’ higher probable upside, analysts clearly believe Computer Programs and Systems is more favorable than Liquidity Services.

Dividends

Computer Programs and Systems pays an annual dividend of $1.20 per share and has a dividend yield of 4.2%. Liquidity Services does not pay a dividend. Computer Programs and Systems pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Computer Programs and Systems has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500. Comparatively, Liquidity Services has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Summary

Computer Programs and Systems beats Liquidity Services on 9 of the 14 factors compared between the two stocks.

Computer Programs and Systems Company Profile

Computer Programs and Systems, Inc. (CPSI) is a provider of healthcare information technology (IT) solutions for rural and community hospitals, and post-acute care facilities. The Company’s segments include acute care EHR, post-acute care EHR, and TruBridge, Rycan, and other outsourcing. Its Acute Care EHR segment consists of acute care software solutions and supports sales generated by its subsidiaries, Evident, LLC (Evident) and Healthland Inc. (Healthland). Its Post-acute Care EHR segment consists of post-acute care software solutions and support sales generated by American HealthTech, Inc. (AHT). Its TruBridge, Rycan, and Other Outsourcing segment primarily consists of business management, consulting and managed IT services sales generated by TruBridge, LLC (TruBridge) and the sale of Rycan Technologies, Inc.’s (Rycan’s) revenue cycle management workflow and automation software.

Liquidity Services Company Profile

Liquidity Services, Inc. operates a network of e-commerce marketplaces that enable buyers and sellers to transact in an automated environment. The Company employs e-commerce marketplace solutions to manage, value and sell inventory and equipment for business and government clients. The Company’s marketplaces provide professional buyers access to a global supply of new, surplus and scrap assets presented with digital images and other relevant product information. Additionally, the Company enables its corporate and government sellers to enhance their financial return on assets offered for sale by providing a liquid marketplace and value-added services. The Company’s range of services include program management, valuation, asset management, reconciliation, Return to Vendor and Returns Management Authorization (RTV and RMA), refurbishment and recycling, fulfillment, marketing and sales, warehousing and transportation, buyer customer support, and compliance and risk mitigation.

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