Payment Data Systems (NASDAQ:PYDS) and QC (OTCMKTS:QCCO) are both small-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.

Risk and Volatility

Payment Data Systems has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, QC has a beta of 2.39, meaning that its stock price is 139% more volatile than the S&P 500.

Institutional & Insider Ownership

1.9% of Payment Data Systems shares are held by institutional investors. 46.6% of Payment Data Systems shares are held by company insiders. Comparatively, 63.4% of QC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Payment Data Systems and QC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Payment Data Systems 0 0 2 0 3.00
QC 0 0 0 0 N/A

Payment Data Systems currently has a consensus price target of $4.00, indicating a potential upside of 119.78%. Given Payment Data Systems’ higher possible upside, equities research analysts plainly believe Payment Data Systems is more favorable than QC.

Earnings & Valuation

This table compares Payment Data Systems and QC’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Payment Data Systems $14.57 million 2.00 -$3.00 million ($0.33) -5.52
QC $98.21 million 0.10 -$3.54 million N/A N/A

Payment Data Systems has higher earnings, but lower revenue than QC.

Profitability

This table compares Payment Data Systems and QC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Payment Data Systems -20.03% -32.31% -5.83%
QC -4.96% N/A N/A

Summary

QC beats Payment Data Systems on 6 of the 11 factors compared between the two stocks.

About Payment Data Systems

Payment Data Systems, Inc., together with its subsidiaries, provides integrated electronic payment processing services to merchants and businesses in the United States. The company offers various types of automated clearing house (ACH) processing; and credit, prepaid card, and debit card-based processing services. Its ACH processing services include Represented Check, a consumer non-sufficient funds check that is represented for payment electronically rather than through the paper check collection system; and Accounts Receivable Check Conversion, a consumer paper check payment, which is converted into an e-check. The company also offers merchant account services for the processing of card-based transactions through the VISA, MasterCard, American Express, Discover, and JCB networks, including online terminal services accessed through a Website or retail services accessed through a physical terminal. In addition, it provides a proprietary Web-based customer service application that allows companies to process one-time and recurring payments through e-checks or credit cards; and an interactive voice response telephone system to companies, which accept payments directly from consumers over the telephone using e-checks or credit cards. Further, the company creates, manages, and processes prepaid card programs for corporate clients to issue prepaid cards to their customer base or employees; and issues general purpose reloadable cards to consumers as an alternative to a traditional bank account. Additionally, it operates billx.com, a consumer Website that allows consumers to process online payments to pay other individual; and provides prepaid cards to consumers for use in as a tool to stay on budget, manage allowances, and share money with family and friends. The company markets and sells its products and services directly, as well as through non-exclusive resellers. Payment Data Systems, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.

About QC

QC Holdings, Inc. and its subsidiaries provide various financial services. The company operates through three segments: Branch Lending, Centralized Lending, and E-Lending. The Branch Lending segment offers payday loans, installment loans, credit services, open-end credit, check cashing services, title loans, debit cards, money transfers, and money orders through its retail branches. The Centralized Lending segment provides long-term installment loans comprising signature and auto equity loans. The E-Lending segment is involved in the Internet lending operations in the United States and Canada. As of December 31, 2014, it operated 409 branches with locations in Alabama, Arizona, California, Colorado, Idaho, Illinois, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin. QC Holdings, Inc. was founded in 1984 and is headquartered in Overland Park, Kansas.

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