Critical Analysis: Vantiv (VNTV) versus WageWorks (WAGE)
Vantiv (NYSE: VNTV) and WageWorks (NYSE:WAGE) are both mid-cap business services companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.
Insider and Institutional Ownership
80.0% of Vantiv shares are held by institutional investors. 1.3% of Vantiv shares are held by company insiders. Comparatively, 3.5% of WageWorks shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Risk & Volatility
Vantiv has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, WageWorks has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.
This table compares Vantiv and WageWorks’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares Vantiv and WageWorks’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Vantiv||$3.80 billion||2.96||$880.01 million||$1.29||54.16|
|WageWorks||$434.87 million||5.94||$81.87 million||$1.09||59.68|
Vantiv has higher revenue and earnings than WageWorks. Vantiv is trading at a lower price-to-earnings ratio than WageWorks, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and price targets for Vantiv and WageWorks, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Vantiv currently has a consensus price target of $75.54, indicating a potential upside of 8.13%. WageWorks has a consensus price target of $80.30, indicating a potential upside of 23.44%. Given WageWorks’ stronger consensus rating and higher possible upside, analysts clearly believe WageWorks is more favorable than Vantiv.
Vantiv, Inc. is a holding company. The Company conducts its operations through its subsidiary, Vantiv Holding, LLC. The Company is a payment processor. The Company’s segments include Merchant Services and Financial Institution Services. The Company offers a range of payment processing services that enable its clients to meet their payment processing needs through a single provider. The Company enables merchants to accept and process credit, debit and prepaid payments, and provide them supporting value-added services, such as security solutions and fraud management, information solutions and interchange management. It also provides payment services to financial institutions, such as card issuer processing, payment network processing, fraud protection, card production, prepaid program management, automated teller machine (ATM) driving and network gateway and switching services that utilize the Company’s Jeanie personal identification number (PIN) debit payment network.
WageWorks, Inc. is engaged in administering Consumer-Directed Benefits (CDBs). The Company administers CBDs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, Consolidated Omnibus Budget Reconciliation Act (COBRA) and other employee benefits. Its CDB programs assist employees and their families in saving money by using pre-tax dollars to pay for certain of their healthcare, dependent care and commuter expenses. Employers financially benefit from its programs through reduced payroll taxes. It provides operational support services to its clients and its cross-functional teams, including customer support and claims processing. It administers HSAs for employers that allow employee participants to invest funds to be used for qualified healthcare expenses.
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