Head-To-Head Analysis: Evertec (EVTC) and Synacor (SYNC)

Evertec (NYSE: EVTC) and Synacor (NASDAQ:SYNC) are both small-cap business services companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, earnings, valuation, institutional ownership and risk.

Risk and Volatility

Evertec has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Synacor has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Profitability

This table compares Evertec and Synacor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Evertec 15.92% 95.54% 13.45%
Synacor -9.87% -31.12% -15.09%

Institutional and Insider Ownership

79.3% of Evertec shares are owned by institutional investors. Comparatively, 30.1% of Synacor shares are owned by institutional investors. 1.4% of Evertec shares are owned by company insiders. Comparatively, 24.7% of Synacor shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Evertec and Synacor, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Evertec 1 4 1 0 2.00
Synacor 0 2 3 0 2.60

Evertec currently has a consensus price target of $17.80, indicating a potential upside of 28.99%. Synacor has a consensus price target of $5.00, indicating a potential upside of 112.77%. Given Synacor’s stronger consensus rating and higher possible upside, analysts plainly believe Synacor is more favorable than Evertec.

Valuation and Earnings

This table compares Evertec and Synacor’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Evertec $389.51 million 2.56 $75.03 million $0.88 15.68
Synacor $127.37 million 0.71 -$10.74 million ($0.40) -5.88

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

Dividends

Evertec pays an annual dividend of $0.40 per share and has a dividend yield of 2.9%. Synacor does not pay a dividend. Evertec pays out 45.5% of its earnings in the form of a dividend.

Summary

Evertec beats Synacor on 11 of the 16 factors compared between the two stocks.

Evertec Company Profile

EVERTEC, Inc. is a transaction processing company. The Company provides a range of merchant acquiring, payment processing and business process management services. The Company operates through three segments: Merchant Acquiring, Payment Processing and Business Solutions. As of December 31, 2016, it managed a system of electronic payment networks that processed over two billion transactions annually. It offers a range of services for core bank processing, cash processing and technology outsourcing. It owns and operates the ATH network, which is a personal identification number (PIN) debit network in Latin America. It serves a range of financial institutions, merchants, corporations and government agencies with solutions that enable them to issue, process and accept transactions securely. The Company’s range of services spans the entire transaction processing value chain and includes a range of front-end customer-facing solutions.

Synacor Company Profile

Synacor, Inc. is a technology development, multiplatform services and revenue partner for video, Internet and communications providers, device manufacturers and enterprises. The Company enables its customers to provide their consumers engaging, multiscreen experiences with products that require scale, actionable data and implementation. Through its Managed Portals and Advertising solutions, the Company enables its customers to earn revenue by monetizing media among their consumers. Its Managed Portals are delivered across devices and under its customers’ own brand names. The Company delivers content, such as top news, entertainment, and long- and short-form video and applications, on its Managed Portals. In addition, consumers have the ability through portals to manage their e-mail and messaging, pay bills, receive special promotions and perform other account management needs.

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