Pharma Bio Serv (PBSV) and NIC (EGOV) Financial Analysis

Pharma Bio Serv (OTCMKTS:PBSV) and NIC (NASDAQ:EGOV) 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 dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.

Dividends

Pharma Bio Serv pays an annual dividend of $0.08 per share and has a dividend yield of 6.7%. NIC pays an annual dividend of $0.32 per share and has a dividend yield of 2.3%. Pharma Bio Serv pays out -133.3% of its earnings in the form of a dividend. NIC pays out 41.6% 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. Pharma Bio Serv is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Pharma Bio Serv has a beta of 0.13, meaning that its share price is 87% less volatile than the S&P 500. Comparatively, NIC has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Institutional and Insider Ownership

87.8% of NIC shares are held by institutional investors. 51.6% of Pharma Bio Serv shares are held by insiders. Comparatively, 4.1% of NIC shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Pharma Bio Serv and NIC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pharma Bio Serv 0 0 0 0 N/A
NIC 0 3 0 0 2.00

NIC has a consensus price target of $16.50, indicating a potential upside of 19.48%. Given NIC’s higher possible upside, analysts plainly believe NIC is more favorable than Pharma Bio Serv.

Valuation and Earnings

This table compares Pharma Bio Serv and NIC’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pharma Bio Serv $15.58 million 1.80 -$1.41 million ($0.06) -20.00
NIC $336.51 million 2.73 $51.61 million $0.77 17.94

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

Profitability

This table compares Pharma Bio Serv and NIC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pharma Bio Serv -14.93% 0.49% 0.41%
NIC 16.94% 32.21% 20.19%

Summary

NIC beats Pharma Bio Serv on 11 of the 14 factors compared between the two stocks.

Pharma Bio Serv Company Profile

Pharma-Bio Serv, Inc. operates as a compliance and technology transfer services consulting firm with a laboratory testing facility in Puerto Rico, the United States, Europe, and Brazil markets. It provides compliance consulting services to the pharmaceutical, chemical, biotechnology, medical device, cosmetic, food industries, and allied products in Puerto Rico, the United States, Europe, and Brazil. The company's technical consulting services comprise regulatory compliance, validation, technology transfer, engineering, project management, and process support. It also offers microbiological and chemical testing services through its lab; and technical trainings/seminars. The company markets its services through industry trade shows, professional conventions, industry publications, and seminars. Pharma-Bio Serv, Inc. was founded in 1993 and is headquartered in Dorado, Puerto Rico.

NIC Company Profile

NIC Inc., together with its subsidiaries, provides digital government services that enable governments to use technology to provide various services to businesses and citizens in the United States. The company's outsourced portal business enters into long-term contracts with state and local governments to design, build, and operate Internet-based and enterprise-wide portals on their behalf. Its portals consist of Websites and applications that enable businesses and citizens to access government information online and secure transactions, such as applying for a permit, retrieving government records, or filing a government-mandated form or report. The company's portal service offerings include motor vehicle driver history record retrieval; vehicle title, lien, and registration; motor vehicle inspections; temporary vehicle tags; driver's license renewal; hunting and fishing licenses; health professional license services; professional license renewal; business registrations and renewals; secretary of state business searches; Uniform Commercial Code (UCC) searches and filings; limited criminal history searches; court services; vital records; income and property tax payments; and payment processing products and services. Its software & services business provides software development and payment processing services to state and local governments, as well as federal agencies. In addition, the company develops and manages the pre-employment screening program for motor carriers using transaction-based business model. Further, it offers consulting, application development, and portal management services to governments. NIC Inc. was founded in 1991 and is based in Olathe, Kansas.

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