CSG Systems International (NASDAQ: CSGS) and Automatic Data Processing (NASDAQ:ADP) are both computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, risk and valuation.
Risk and Volatility
CSG Systems International has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.
This table compares CSG Systems International and Automatic Data Processing’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|CSG Systems International||$760.96 million||1.99||$62.88 million||$1.79||25.25|
|Automatic Data Processing||$12.38 billion||4.33||$1.73 billion||$3.93||30.76|
Automatic Data Processing has higher revenue and earnings than CSG Systems International. CSG Systems International is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for CSG Systems International and Automatic Data Processing, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CSG Systems International||0||0||1||0||3.00|
|Automatic Data Processing||0||10||5||0||2.33|
CSG Systems International currently has a consensus price target of $47.00, indicating a potential upside of 4.01%. Automatic Data Processing has a consensus price target of $113.85, indicating a potential downside of 5.83%. Given CSG Systems International’s stronger consensus rating and higher possible upside, equities research analysts clearly believe CSG Systems International is more favorable than Automatic Data Processing.
CSG Systems International pays an annual dividend of $0.79 per share and has a dividend yield of 1.7%. Automatic Data Processing pays an annual dividend of $2.52 per share and has a dividend yield of 2.1%. CSG Systems International pays out 44.1% of its earnings in the form of a dividend. Automatic Data Processing pays out 64.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Institutional and Insider Ownership
91.3% of CSG Systems International shares are held by institutional investors. Comparatively, 78.7% of Automatic Data Processing shares are held by institutional investors. 2.6% of CSG Systems International shares are held by company insiders. Comparatively, 0.3% of Automatic Data Processing shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This table compares CSG Systems International and Automatic Data Processing’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|CSG Systems International||7.57%||22.11%||7.58%|
|Automatic Data Processing||14.08%||42.34%||4.28%|
Automatic Data Processing beats CSG Systems International on 9 of the 16 factors compared between the two stocks.
About CSG Systems International
CSG Systems International, Inc. (CSG) is a provider of business support solutions primarily serving the communications industry. The Company provides business support solutions (BSS) to the communications service providers (CSPs), as well as clients in various industries. CSG’s solutions coordinate and manage various aspects of a service provider’s customer interactions, from the initial activation of customer accounts, to the support and fulfillment of various services, and through the calculation, presentment, and accounts receivables management of monthly customer statements. The Company’s primary product solutions include Revenue Management & Customer Experience Solutions; Customer Interaction Management; Managed Services; Mediation and Data Management, and Wholesale Settlement and Routing. The Company employs professional services across various sectors, including solution architecture, project management, systems implementation and business consultancy.
About Automatic Data Processing
Automatic Data Processing, Inc. (ADP) is a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions. These offerings include payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services. ADP TotalSource, ADP’s PEO business, offers small and mid-sized businesses a HR outsourcing solution through a co-employment model. As a PEO, ADP TotalSource provides HR management services while the client continues to direct the day-to-day job-related duties of the employees.
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