Smith Micro Software (NASDAQ: SMSI) and The Ultimate Software Group (NASDAQ:ULTI) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, analyst recommendations, earnings and valuation.

Insider and Institutional Ownership

14.9% of Smith Micro Software shares are owned by institutional investors. 22.0% of Smith Micro Software shares are owned by insiders. Comparatively, 4.9% of The Ultimate Software Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Smith Micro Software and The Ultimate Software Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Smith Micro Software $28.24 million 1.39 -$14.51 million ($0.76) -3.61
The Ultimate Software Group $781.29 million 8.65 $30.25 million $0.97 233.28

The Ultimate Software Group has higher revenue and earnings than Smith Micro Software. Smith Micro Software is trading at a lower price-to-earnings ratio than The Ultimate Software Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Smith Micro Software and The Ultimate Software Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Smith Micro Software 0 0 0 0 N/A
The Ultimate Software Group 1 3 17 0 2.76

The Ultimate Software Group has a consensus target price of $232.37, indicating a potential upside of 2.69%. Given The Ultimate Software Group’s higher possible upside, analysts clearly believe The Ultimate Software Group is more favorable than Smith Micro Software.

Volatility & Risk

Smith Micro Software has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, The Ultimate Software Group has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Profitability

This table compares Smith Micro Software and The Ultimate Software Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Smith Micro Software -39.83% -265.05% -37.51%
The Ultimate Software Group 3.31% 6.84% 2.45%

Summary

The Ultimate Software Group beats Smith Micro Software on 11 of the 13 factors compared between the two stocks.

Smith Micro Software Company Profile

Smith Micro Software, Inc. is a provider of software solutions. The Company operates through two segments: Wireless and Graphics. The Company offers multi-platform, modular solutions organized into three product families, including NetWise, CommSuite and QuickLink. For mobile network operators, NetWise helps reduce cellular congestion and optimize data traffic across third-generation (3G), fourth-generation (4G) and wireless fidelity (Wi-Fi) networks. Graphics segment includes its consumer-based products, such as Poser, Anime Studio, Manga Studio, MotionArtist and StuffIt. The Graphics segment develops a range of software, including graphic design and animation, compression and personal computer (PC)/Mac utilities, for consumers, professional artists and educators. The Company also offers Family Safety platform for family locator and parental controls.

The Ultimate Software Group Company Profile

The Ultimate Software Group, Inc. (Ultimate) is a cloud provider of people management solutions, referred to as human capital management (HCM). The Company’s UltiPro product suite (UltiPro) is an engaging solution that has human resources (HR), payroll and benefits management. As of December 31, 2016, UltiPro included global people management, available in 14 languages with more than 35 country-specific localizations. The solution is delivered through software-as-a-service (SaaS) to organizations based in the United States and Canada, including those with global workforces. The UltiPro solution includes feature sets for talent acquisition and onboarding, HR management and compliance, benefits management and online enrollment, payroll, performance management, compensation management with salary planning, budgeting, and development of incentive plans, succession management, reporting and analytical decision-making and predictive tools, and time and attendance.

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