Head-To-Head Analysis: Karooooo (NASDAQ:KARO) versus SPS Commerce (NASDAQ:SPSC)

Karooooo (NASDAQ:KARO) and SPS Commerce (NASDAQ:SPSC) are both mid-cap technology companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitability, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Karooooo and SPS Commerce, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Karooooo	0	2	5	0	2.71
SPS Commerce	2	6	2	1	2.18

Karooooo currently has a consensus price target of $73.50, suggesting a potential upside of 13.46%. SPS Commerce has a consensus price target of $77.10, suggesting a potential downside of 6.75%. Given Karooooo’s stronger consensus rating and higher possible upside, equities analysts clearly believe Karooooo is more favorable than SPS Commerce.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Karooooo	17.74%	32.03%	19.06%
SPS Commerce	10.10%	13.04%	10.83%

Valuation & Earnings

This table compares Karooooo 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
Karooooo	$314.11 million	6.37	$56.95 million	$1.97	32.88
SPS Commerce	$751.51 million	3.96	$93.34 million	$2.07	39.94

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

Institutional and Insider Ownership

99.0% of SPS Commerce shares are owned by institutional investors. 74.7% of Karooooo shares are owned by insiders. Comparatively, 0.6% of SPS Commerce shares are owned 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.

Volatility and Risk

Karooooo has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Summary

Karooooo beats SPS Commerce on 9 of the 15 factors compared between the two stocks.

About Karooooo

Karooooo Ltd. provides mobility software-as-a-service (SaaS) platform for connected vehicles in South Africa, rest of Africa, Europe, the Asia-Pacific, the Middle East, and the United States. The company offers Fleet Telematics, a fleet management SaaS platform that provides real-time insights; LiveVision, which offers pro-active risk management and fleet visibility; MiFleet advanced fleet administration and business intelligence that provides cost management and administration capability services; and Karooooo Logistics, a software application for management of last mile delivery and general operational logistics. It provides Cartrack Field Service, a software application for management of field and on site workers; Business Intelligence for high-level view of fleet statistics; asset tracking for tracking and tracing moveable assets; asset recovery services that assists vehicle owners and insurance companies with the recovery of vehicles and other assets; and insurance telematics that allows insurers to tailor premiums for commercial and consumer customers using analytics; Protector, a safety package for consumer vehicles; and Car Watch, a mobile application that lets users track and watch their vehicles. In addition, the company offers specialist mobility solutions that include Bike Track, a GPS-based solution for commercial motorbike fleets; Credit Management that predicts payment cycles and facilitate active credit management for asset-based vehicle finance; electronic monitoring services application that allows law enforcement agencies to monitor persons of interest; and mobility and monitoring solutions, such as Carzuka, cartrack insurance agency, and on-demand rideshare taxi application, as well as smart IoT products. It provides its solutions through direct sales force to consumers and sole proprietors, small and medium-sized businesses, large enterprises, and other connected devices. Karooooo Ltd. was founded in 2001 and is headquartered in Singapore.

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.