Inovalon (NASDAQ: INOV) and PFSweb (NASDAQ:PFSW) are both small-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Volatility and Risk

Inovalon has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, PFSweb has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Earnings and Valuation

This table compares Inovalon and PFSweb’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Inovalon $427.59 million 4.66 $27.10 million $0.12 113.76
PFSweb $334.64 million 0.43 -$7.53 million ($0.60) -12.62

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Inovalon and PFSweb, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Inovalon 1 4 0 0 1.80
PFSweb 0 2 4 0 2.67

Inovalon presently has a consensus price target of $12.00, suggesting a potential downside of 12.09%. PFSweb has a consensus price target of $10.70, suggesting a potential upside of 41.35%. Given PFSweb’s stronger consensus rating and higher possible upside, analysts plainly believe PFSweb is more favorable than Inovalon.

Profitability

This table compares Inovalon and PFSweb’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Inovalon 4.07% 4.63% 2.99%
PFSweb -3.30% 1.98% 0.40%

Institutional & Insider Ownership

28.1% of Inovalon shares are owned by institutional investors. Comparatively, 58.3% of PFSweb shares are owned by institutional investors. 48.3% of Inovalon shares are owned by insiders. Comparatively, 5.2% of PFSweb shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Inovalon beats PFSweb on 10 of the 14 factors compared between the two stocks.

About Inovalon

Inovalon Holdings, Inc. (Inovalon) is a technology company. The Company provides cloud-based platforms empowering a data-driven transformation from volume-based to value-based models to the healthcare industry. Leveraging large-scale data interconnectivity capabilities, unparalleled proprietary data sets, advanced analytics, data-driven intervention systems, and subject matter expertise, Inovalon enables the assessment and improvement of clinical and quality outcomes and financial performance across the healthcare ecosystem. The Company serves clients across the healthcare industry, which includes health plans and provider organizations, pharmaceutical, medical device, and diagnostics companies. It provides technology that supports approximately 500 healthcare organizations. Inovalon’s platforms are informed by data pertaining to more than 858,000 physicians, 377,000 clinical facilities, and more than 230 million Americans.

About PFSweb

PFSWEB, Inc. is a global provider of omni-channel commerce solutions, including a range of technology, infrastructure and professional services. The Company’s service offerings include Website design, creation and integration, digital agency and marketing, e-commerce technologies, order management, customer care, logistics and fulfillment, financial management and professional consulting. It operates through two segments: PFSweb, and Business and Retail Connect. PFSweb is a global provider of various infrastructure, technology and digital agency solutions and operates as a service fee business. In the Business and Retail Connect segment, subsidiaries of the Company purchase inventory from clients and resell the inventory to client customers. Its solutions support direct-to-consumer (DTC), business-to-business (B2B) and retail sales channels. It markets its solutions as PFSweb’s End2End eCommerce solution.

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