SPS Commerce (NASDAQ:SPSC) and Pivotal Software (NYSE:PVTL) are both business services companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Risk & Volatility

SPS Commerce has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Pivotal Software has a beta of -0.46, meaning that its share price is 146% less volatile than the S&P 500.

Insider and Institutional Ownership

49.3% of SPS Commerce shares are held by institutional investors. Comparatively, 24.9% of Pivotal Software shares are held by institutional investors. 3.3% of SPS Commerce shares are held by company insiders. Comparatively, 64.9% of Pivotal Software shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for SPS Commerce and Pivotal Software, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SPS Commerce 0 0 7 0 3.00
Pivotal Software 1 8 2 0 2.09

SPS Commerce currently has a consensus price target of $57.93, indicating a potential upside of 19.42%. Pivotal Software has a consensus price target of $17.33, indicating a potential upside of 16.49%. Given SPS Commerce’s stronger consensus rating and higher probable upside, equities analysts clearly believe SPS Commerce is more favorable than Pivotal Software.

Valuation & Earnings

This table compares SPS Commerce and Pivotal Software’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SPS Commerce $248.24 million 6.82 $23.87 million $0.61 79.52
Pivotal Software $657.49 million 6.15 -$141.90 million ($0.63) -23.62

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

Profitability

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

Net Margins Return on Equity Return on Assets
SPS Commerce 11.69% 9.10% 7.48%
Pivotal Software -18.66% -9.92% -6.92%

Summary

SPS Commerce beats Pivotal Software on 12 of the 14 factors compared between the two stocks.

SPS Commerce Company Profile

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It offers solutions through the SPS Commerce platform, a cloud-based platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill orders, administer sell-through performance, and source new items. The company offers Trading Partner Community solution, which enables retailers, grocers, and distributors to introduce changes to their supply chain requirements to their trading partner community, and onboard new vendors to receive their first orders; Trading Partner Fulfillment solution that provides fulfillment automation and replaces or augments an organization's existing staff and trading partner electronic communication infrastructure; and Trading Partner Assortment solution to manage individual attributes associated with each item a retailer or supplier sells. It also provides Trading Partner Analytics solution, which consists of data analytics applications that allow customers to enhance their visibility and analysis of their supply chains; Trading Partner Sourcing solutions that enables retailers to source providers of new items, suppliers to connect with new retailers, and retailing community; and Other Trading Partner Solutions, such as barcode labeling, planogram services, and scan and pack application that helps trading partners process information to streamline the picking and packaging process. The company sells its solutions through retailer, supplier, and logistic sales representatives to small- to mid-sized suppliers, as well as retailers, distributors, third-party logistics providers, and other trading partners. 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.

Pivotal Software Company Profile

Pivotal Software, Inc., together with its subsidiaries, provides an integrated solution that combines a cloud-native application platform and services in the United States. Its cloud-native platform, Pivotal Cloud Foundry (PCF), accelerates and streamlines software development by reducing the complexity of building, deploying, and operating modern applications. The company also enables its customers to accelerate their adoption of a modern software development process and their business success using its platform through its strategic services, Pivotal Labs (Labs). Pivotal Software, Inc. markets and sells PCF and Labs through its sales force and ecosystem partners. The company was founded in 2013 and is headquartered in San Francisco, California.

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