Critical Analysis: Smith Micro Software (SMSI) versus MINDBODY (MB)

Smith Micro Software (NASDAQ: SMSI) and MINDBODY (NASDAQ:MB) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitabiliy, institutional ownership and valuation.

Institutional & Insider Ownership

14.6% of Smith Micro Software shares are held by institutional investors. Comparatively, 71.5% of MINDBODY shares are held by institutional investors. 22.0% of Smith Micro Software shares are held by insiders. Comparatively, 8.2% of MINDBODY shares are held by 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.

Volatility & Risk

Smith Micro Software has a beta of 0.04, meaning that its share price is 96% less volatile than the S&P 500. Comparatively, MINDBODY has a beta of -0.48, meaning that its share price is 148% less volatile than the S&P 500.

Valuation and Earnings

This table compares Smith Micro Software and MINDBODY’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Smith Micro Software	$26.60 million	0.44	-$12.14 million	($1.07)	-0.90
MINDBODY	$159.77 million	7.08	-$8.94 million	($0.45)	-54.22

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

Profitability

This table compares Smith Micro Software and MINDBODY’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith Micro Software	-49.02%	-222.45%	-54.76%
MINDBODY	-11.34%	-16.65%	-11.83%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Smith Micro Software and MINDBODY, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith Micro Software	0	0	0	0	N/A
MINDBODY	0	2	6	0	2.75

MINDBODY has a consensus price target of $29.33, suggesting a potential upside of 20.22%. Given MINDBODY’s higher possible upside, analysts plainly believe MINDBODY is more favorable than Smith Micro Software.

Summary

MINDBODY beats Smith Micro Software on 10 of the 12 factors compared between the two stocks.

Smith Micro Software Company Profile

Smith Micro Software, Inc. is a provider of software solutions. The Company operates through two segments: Wireless and Graphics. The Company offers multi-platform, modular solutions organized into three product families, including NetWise, CommSuite and QuickLink. For mobile network operators, NetWise helps reduce cellular congestion and optimize data traffic across third-generation (3G), fourth-generation (4G) and wireless fidelity (Wi-Fi) networks. Graphics segment includes its consumer-based products, such as Poser, Anime Studio, Manga Studio, MotionArtist and StuffIt. The Graphics segment develops a range of software, including graphic design and animation, compression and personal computer (PC)/Mac utilities, for consumers, professional artists and educators. The Company also offers Family Safety platform for family locator and parental controls.

MINDBODY Company Profile

MINDBODY, Inc. is a provider of cloud-based business management software for the wellness services industry and operates as a consumer marketplace with local business subscribers on its platform. The Company’s subscribers provide a range of wellness services to active consumers. Its integrated software and payments platform helps business owners in the wellness services industry run, market and build their businesses. It also helps consumers discover, evaluate, engage and transact with these businesses through the Web and mobile devices. The platform addresses various aspects of operating a wellness business, including client scheduling and online booking; retail point-of-sale; analytics and reporting; user experience; mobility; social integration; dynamic cloud-based architecture; open platform for third-party application development; integration with other cloud-based partners, and security and compliance.