Care.com (NYSE: CRCM) and NIC (NASDAQ:EGOV) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, earnings, profitability, institutional ownership and valuation.

Profitability

This table compares Care.com and NIC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Care.com 3.66% 10.98% 4.67%
NIC 17.31% 38.37% 23.00%

Analyst Ratings

This is a summary of recent recommendations for Care.com and NIC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Care.com 0 1 1 0 2.50
NIC 1 5 1 0 2.00

Care.com currently has a consensus target price of $14.00, indicating a potential downside of 14.69%. NIC has a consensus target price of $19.33, indicating a potential upside of 10.48%. Given NIC’s higher possible upside, analysts clearly believe NIC is more favorable than Care.com.

Volatility and Risk

Care.com has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, NIC has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500.

Dividends

NIC pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. Care.com does not pay a dividend. NIC pays out 38.1% of its earnings in the form of a dividend.

Insider and Institutional Ownership

73.7% of Care.com shares are owned by institutional investors. Comparatively, 92.9% of NIC shares are owned by institutional investors. 24.7% of Care.com shares are owned by company insiders. Comparatively, 4.1% of NIC shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Care.com and NIC’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Care.com $169.64 million 2.88 $8.45 million $0.10 164.12
NIC $327.22 million 3.54 $83.34 million $0.84 20.83

NIC has higher revenue and earnings than Care.com. NIC is trading at a lower price-to-earnings ratio than Care.com, indicating that it is currently the more affordable of the two stocks.

Summary

NIC beats Care.com on 10 of the 15 factors compared between the two stocks.

About Care.com

Care.com, Inc. is an online marketplace for finding and managing family care. As of December 31, 2016, the Company had 22.8 million members, including 12.9 million families and 9.9 million caregivers, spanning 19 countries. Its consumer matching solutions allow families to search for, qualify, vet, connect with and select caregivers. It also provides caregivers with solutions to create personal profiles, describe their skills and experience, and otherwise differentiate and market themselves in a fragmented marketplace. In addition to consumer matching solutions, the Company offers its members products and services to facilitate their interaction with caregivers. It serves employers by providing access to certain of its products and services to employer-sponsored families. In addition, it serves care-related businesses, such as day care centers, nanny agencies and home care agencies, willing to market their services to its care-seeking families and recruit its caregiver members.

About NIC

NIC Inc. is a provider of digital government services that help governments use technology to provide services to businesses and citizens. The Company operates through Outsourced Portals segment. The Company offers its services through two channels: primary outsourced portal businesses, and software and services businesses. In the primary outsourced portal businesses, the Company enters into contracts with state and local governments to design, build, and operate Internet-based, enterprise-wide portals on their behalf. Its software and services businesses include its subsidiaries that provide software development and payment processing services, other than outsourced portal services, to state and local governments, as well as federal agencies. The Company’s outsourced portal businesses include interactive government services (IGS), driver history records (DHR), Portal software development and services, and Portal management.

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