Analyzing The Advisory Board (ABCO) & Worldpay (WP)

Worldpay (NYSE: WP) and The Advisory Board (NASDAQ:ABCO) are both mid-cap business services companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Profitability

This table compares Worldpay and The Advisory Board’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Worldpay 6.07% 41.19% 7.92%
The Advisory Board -3.42% 0.48% -1.23%

Analyst Ratings

This is a breakdown of current recommendations for Worldpay and The Advisory Board, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Worldpay 0 5 27 1 2.88
The Advisory Board 0 11 3 0 2.21

Worldpay presently has a consensus price target of $82.93, suggesting a potential upside of 4.34%. The Advisory Board has a consensus price target of $51.44, suggesting a potential downside of 4.44%. Given Worldpay’s stronger consensus rating and higher possible upside, research analysts plainly believe Worldpay is more favorable than The Advisory Board.

Earnings and Valuation

This table compares Worldpay and The Advisory Board’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Worldpay $3.58 billion 3.95 $213.20 million $1.45 54.81
The Advisory Board $803.42 million 2.73 $91.23 million $1.74 30.94

Worldpay has higher revenue and earnings than The Advisory Board. The Advisory Board is trading at a lower price-to-earnings ratio than Worldpay, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Worldpay has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, The Advisory Board has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Institutional and Insider Ownership

95.5% of The Advisory Board shares are owned by institutional investors. 1.3% of Worldpay shares are owned by insiders. Comparatively, 4.7% of The Advisory Board 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.

Summary

Worldpay beats The Advisory Board on 10 of the 15 factors compared between the two stocks.

About Worldpay

Worldpay, Inc., formerly 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.

About The Advisory Board

The Advisory Board Company is a provider of software and solutions to the healthcare and higher education industries. The Company offers subscription-based membership programs, software and data-enabled services. All of its programs are rooted in best practices and extends across four areas, including Best practices research, Technology, Data-enabled services and Consulting services. The best practices research and insight programs provide the foundation for all of its other programs. The Company offers technology analytics programs anchored by cloud-based software applications that surface performance improvement opportunities to accelerate progress. Through its consulting services, the Company provides on-the-ground support for performance improvement initiatives, as well as best practice professional management of areas of the hospital or medical group. The Company’s data-enabled services are primarily focused in the area of enrollment management.

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