Financial Analysis: Benefitfocus (BNFT) and Ebix (EBIX)

Benefitfocus (NASDAQ: BNFT) and Ebix (NASDAQ:EBIX) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Insider & Institutional Ownership

81.9% of Benefitfocus shares are owned by institutional investors. Comparatively, 65.3% of Ebix shares are owned by institutional investors. 40.1% of Benefitfocus shares are owned by insiders. Comparatively, 13.0% of Ebix shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Benefitfocus and Ebix’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Benefitfocus $248.19 million 3.56 -$6.36 million ($0.92) -30.76
Ebix $321.14 million 5.58 $114.36 million $3.07 18.55

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

Risk and Volatility

Benefitfocus has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Ebix has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500.

Dividends

Ebix pays an annual dividend of $0.30 per share and has a dividend yield of 0.5%. Benefitfocus does not pay a dividend. Ebix pays out 9.8% of its earnings in the form of a dividend.

Profitability

This table compares Benefitfocus and Ebix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Benefitfocus -11.24% N/A -16.22%
Ebix 30.69% 22.02% 11.93%

Analyst Ratings

This is a summary of current ratings and price targets for Benefitfocus and Ebix, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Benefitfocus 0 2 7 0 2.78
Ebix 0 0 1 0 3.00

Benefitfocus currently has a consensus target price of $40.00, suggesting a potential upside of 41.34%. Given Benefitfocus’ higher possible upside, equities analysts plainly believe Benefitfocus is more favorable than Ebix.

Summary

Ebix beats Benefitfocus on 10 of the 15 factors compared between the two stocks.

Benefitfocus Company Profile

Benefitfocus, Inc. (Benefitfocus) is a provider of cloud-based benefits management platform for consumers, employers, insurance carriers and brokers. The Benefitfocus Platform allows how organizations and individuals shop for, enroll in, manage and exchange benefits. The Company operates through two business segments: Employer, which derives its revenue from customers that use the Company’s services for the provision of benefits to their employees, and administrators acting on behalf of employers, Carrier, which derives its revenue from insurance companies that provide coverage at their own risk. Its solutions support benefits plans, including healthcare, dental, life and disability insurance, and voluntary benefits plans, such as critical illness, supplemental income and wellness programs. It provides a multi-tenant cloud-based benefits management platform to the employer and carrier markets.

Ebix Company Profile

Ebix, Inc. (Ebix) is a supplier of software and e-commerce solutions to the insurance industry. Ebix provides application software products for the insurance industry, including carrier systems, agency systems and exchanges, as well as custom software development. Ebix conducts its operations through four channels, which include Exchanges, Carrier Systems, Broker Systems and Risk Compliance Solutions (RCS). Ebix operates data exchanges in the areas of life insurance, annuities, employee health benefits, risk management, workers compensation, and property and casualty (P&C) insurance. Ebix designs and deploys back-end systems for P&C insurance brokers across the world. Ebix also designs and deploys on-demand and back-end systems for P&C insurance companies. Ebix focus in RCS channel pertains to business process outsourcing services that include providing project management, time and material consulting to clients across the world, and claims adjudication/settlement services.

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