Contrasting QAD (QADB) and CDK Global (CDK)

QAD (NASDAQ: QADB) and CDK Global (NASDAQ:CDK) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Analyst Ratings

This is a summary of current recommendations for QAD and CDK Global, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
QAD 0 0 0 0 N/A
CDK Global 0 2 2 0 2.50

CDK Global has a consensus target price of $76.00, suggesting a potential upside of 14.01%. Given CDK Global’s higher possible upside, analysts plainly believe CDK Global is more favorable than QAD.

Profitability

This table compares QAD and CDK Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
QAD -6.40% -2.06% -0.86%
CDK Global 14.29% -5,261.95% 14.12%

Dividends

QAD pays an annual dividend of $0.24 per share and has a dividend yield of 0.7%. CDK Global pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. QAD pays out -23.3% of its earnings in the form of a dividend. CDK Global pays out 26.5% 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

1.9% of QAD shares are held by institutional investors. Comparatively, 89.7% of CDK Global shares are held by institutional investors. 67.4% of QAD shares are held by company insiders. Comparatively, 0.4% of CDK Global shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares QAD and CDK Global’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
QAD $277.97 million 2.39 -$15.45 million ($1.03) -33.51
CDK Global $2.22 billion 4.04 $295.60 million $2.26 29.50

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

Volatility and Risk

QAD has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, CDK Global has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Summary

CDK Global beats QAD on 11 of the 15 factors compared between the two stocks.

QAD Company Profile

QAD Inc. (QAD) is a provider of vertically oriented enterprise software solutions for global manufacturing companies across the automotive, life sciences, consumer products, food and beverage, high technology and industrial products industries. QAD Enterprise Applications enables measurement and control of business processes and supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD delivers components of its solution for a range of mobile platforms. The Company’s mobile suite includes a requisition approval solution, a mobile business intelligence solution, mobile browse capability and mobile application monitoring tools to support system administrators. Its mobile browse capability allows users to view, filter and sort data accessible through QAD Browses within QAD Enterprise Applications using mobile devices.

CDK Global Company Profile

CDK Global, Inc. provides integrated information technology and digital marketing solutions. The Company’s segments include Retail Solutions North America, Advertising North America and CDK International. Through its Retail Solutions North America segment, the Company provides technology-based solutions, including automotive Website platforms, that help automotive retailers, original equipment manufacturers (OEMs) and other industry participants manage the acquisition, sale, financing, insuring, parts supply, repair and maintenance of vehicles. Through its Advertising North America segment, the Company provides advertising solutions, including management of digital advertising spend, for OEMs and automotive retailers. As of June 30, 2016, through its CDK International segment, it provided technology-based solutions similar to the retail solutions provided in its Retail Solutions North America segment in approximately 100 countries outside of the United States and Canada.

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