CSG Systems International (NASDAQ: CSGS) and ServiceSource International (NASDAQ:SREV) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.
Risk and Volatility
CSG Systems International has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, ServiceSource International has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.
This table compares CSG Systems International and ServiceSource International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|CSG Systems International||8.10%||24.76%||7.99%|
CSG Systems International pays an annual dividend of $0.79 per share and has a dividend yield of 2.1%. ServiceSource International does not pay a dividend. CSG Systems International pays out 41.6% of its earnings in the form of a dividend.
Institutional and Insider Ownership
94.6% of CSG Systems International shares are owned by institutional investors. Comparatively, 67.3% of ServiceSource International shares are owned by institutional investors. 2.6% of CSG Systems International shares are owned by company insiders. Comparatively, 30.3% of ServiceSource International shares are owned 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.
Earnings & Valuation
This table compares CSG Systems International and ServiceSource International’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|CSG Systems International||$769.66 million||1.65||$144.79 million||$1.90||19.79|
|ServiceSource International||$246.14 million||1.28||-$6.57 million||($0.49)||-7.24|
CSG Systems International has higher revenue and earnings than ServiceSource International. ServiceSource International is trading at a lower price-to-earnings ratio than CSG Systems International, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and recommmendations for CSG Systems International and ServiceSource International, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CSG Systems International||0||0||1||0||3.00|
CSG Systems International currently has a consensus target price of $47.00, suggesting a potential upside of 24.97%. ServiceSource International has a consensus target price of $6.50, suggesting a potential upside of 83.10%. Given ServiceSource International’s higher probable upside, analysts clearly believe ServiceSource International is more favorable than CSG Systems International.
CSG Systems International beats ServiceSource International on 10 of the 14 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 ServiceSource International
ServiceSource International, Inc. (ServiceSource) is a provider of customer and revenue lifecycle solutions that power enterprise revenue relationships, partnering with business to business technology and technology-enabled companies. The Company operates through two segments: Managed Services, and Cloud and Business Intelligence (CBI). The Company delivers through service teams and integral cloud-based technologies from its database of service. By integrating managed services, cloud software and data, the Company provides its clients with insights into their end customers businesses, end-to-end management and service-contract renewals process. As of December 31, 2016, it managed approximately 143 engagements across 66 clients. Its solutions are designed to optimize recurring revenue across various revenue models, distribution models and segments, including hardware, software, Software-as-a-Service (SaaS), industrial systems, technology-enabled healthcare and life sciences.
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