Critical Review: APi Group (NYSE:APG) and SPS Commerce (NASDAQ:SPSC)

APi Group (NYSE:APG) and SPS Commerce (NASDAQ:SPSC) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Earnings and Valuation

This table compares APi Group and SPS Commerce”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
APi Group	$7.02 billion	2.06	$250.00 million	$0.32	108.42
SPS Commerce	$703.54 million	5.89	$77.05 million	$2.18	50.12

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

Insider & Institutional Ownership

86.6% of APi Group shares are held by institutional investors. Comparatively, 99.0% of SPS Commerce shares are held by institutional investors. 17.0% of APi Group shares are held by insiders. Comparatively, 1.0% of SPS Commerce shares are held by 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 breakdown of current ratings for APi Group and SPS Commerce, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
APi Group	0	2	8	0	2.80
SPS Commerce	0	6	5	0	2.45

APi Group currently has a consensus target price of $36.10, indicating a potential upside of 4.04%. SPS Commerce has a consensus target price of $153.70, indicating a potential upside of 40.67%. Given SPS Commerce’s higher probable upside, analysts plainly believe SPS Commerce is more favorable than APi Group.

Risk and Volatility

APi Group has a beta of 1.62, indicating that its share price is 62% more volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Profitability

This table compares APi Group and SPS Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
APi Group	3.35%	21.33%	7.80%
SPS Commerce	11.79%	12.10%	10.08%

Summary

APi Group beats SPS Commerce on 8 of the 14 factors compared between the two stocks.

About APi Group

APi Group Corporation provides safety and specialty services worldwide. It operates through Safety Services and Specialty Services segments. The Safety Services segment offers solutions focusing on end-to-end integrated occupancy systems, such as fire protection services; heating, ventilation, and air conditioning solutions; and entry systems, which include the design, installation, inspection, and service of these integrated systems. The Specialty Services segment provides various infrastructure and specialized industrial plant services, including maintenance and repair of underground electric, gas, water, sewer, and telecommunications infrastructure. This segment offers engineering and design, fabrication, installation, maintenance service and repair, retrofitting and upgrading services, pipeline infrastructure, access and road construction, supporting facilities, and integrity management and maintenance to the energy industry. It serves customers in the public and private sectors, including commercial, industrial, distribution and fulfillment centers, manufacturing, education, healthcare, telecom, utilities, transmission and integrity, high tech, entertainment, government, and infrastructure markets. The company was formerly known as J2 Acquisition Limited and changed its name to APi Group Corporation in October 2019. APi Group Corporation was founded in 1926 and is headquartered in New Brighton, Minnesota.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions in the United States and internationally. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, grocers, suppliers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment, an electronic data interchange solution that scales as a business grows, where companies use a single system to manage orders and logistics from various sales channels, including wholesale, eCommerce, and marketplaces; and Analytics product that enables organizations to enhance visibility into how products are selling through a single connection across various sales channels, including wholesale, eCommerce, and marketplaces, as well as enhances access and usage of sales and inventory data through a combination of analytics applications, network of connections, and industry-leading expertise. In addition, it offers various complimentary products, such as assortment product, which simplifies the communication of robust, accurate item data by automatically translating item attributes, and hierarchies; and community product that allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through change management and onboarding programs. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.