Analyzing SPS Commerce (NASDAQ:SPSC) & ACI Worldwide (NASDAQ:ACIW)

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

Insider & Institutional Ownership

94.7% of ACI Worldwide shares are held by institutional investors. Comparatively, 99.0% of SPS Commerce shares are held by institutional investors. 1.2% of ACI Worldwide shares are held by company insiders. Comparatively, 0.6% of SPS Commerce shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ACI Worldwide	12.40%	17.62%	8.47%
SPS Commerce	10.10%	13.04%	10.83%

Risk and Volatility

ACI Worldwide has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for ACI Worldwide and SPS Commerce, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ACI Worldwide	0	2	1	1	2.75
SPS Commerce	1	7	2	1	2.27

ACI Worldwide currently has a consensus target price of $61.00, suggesting a potential upside of 12.62%. SPS Commerce has a consensus target price of $80.30, suggesting a potential downside of 9.74%. Given ACI Worldwide’s stronger consensus rating and higher probable upside, research analysts plainly believe ACI Worldwide is more favorable than SPS Commerce.

Valuation and Earnings

This table compares ACI Worldwide and SPS Commerce”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ACI Worldwide	$1.76 billion	3.11	$226.66 million	$2.18	24.85
SPS Commerce	$751.51 million	4.26	$93.34 million	$2.07	42.98

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

Summary

ACI Worldwide beats SPS Commerce on 9 of the 14 factors compared between the two stocks.

About ACI Worldwide

ACI Worldwide, Inc., a software company, develops, markets, installs, and supports a range of software products and solutions for facilitating digital payments in the United States and internationally. The company operates in three segments: Banks, Merchants, and Billers. The company offers ACI Acquiring, a solution to process credit, debit, and prepaid card transactions, deliver digital innovation, and fraud prevention; ACI Issuing, a digital payment issuing solution for new payment offering; and ACI Enterprise Payments Platform that provides payment processing and orchestration capabilities for digital payments. It also provides ACI Low Value Real-Time Payments, a platform for processing real-time payments; and ACI High Value Real-Time Payments, a payments engine that offers multi-bank, multi-currency, 24×7 payment processing, and SWIFT messaging. In addition, the company offers ACI Payments Orchestration Platform for optimizing payments; omni-channel payment platform; ACI Fraud Management, a real-time approach to fraud management; and ACI Speedpay, an integrated suite of digital billing, payment, disbursement, and communication services. The company offers electronic bill presentment and payment services to consumer finance, insurance, healthcare, higher education, utility, government, telecommunications, and mortgage sectors; implementation services, include product installations and configurations, and custom software modifications; and business and technical consultancy, on-site support, product education, and testing services, as well as distributes or acts as a sales agent for software developed by third parties. It markets its products under the ACI Worldwide brand. The company was formerly known as Transaction Systems Architects, Inc. and changed its name to ACI Worldwide, Inc. in July 2007. The company was founded in 1975 and is based in Elkhorn, Nebraska.

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.