Critical Analysis: Ebix (NASDAQ:EBIX) & MicroStrategy (MSTR)

MicroStrategy (NASDAQ: MSTR) and Ebix (NASDAQ:EBIX) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, dividends and risk.

Risk and Volatility

MicroStrategy has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Ebix has a beta of 1.76, indicating that its share price is 76% more volatile than the S&P 500.

Insider & Institutional Ownership

78.4% of MicroStrategy shares are held by institutional investors. Comparatively, 64.5% of Ebix shares are held by institutional investors. 21.8% of MicroStrategy shares are held by company insiders. Comparatively, 13.0% of Ebix 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.

Earnings and Valuation

This table compares MicroStrategy and Ebix’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MicroStrategy $511.19 million 2.89 $109.23 million $7.24 17.82
Ebix $321.14 million 5.58 $113.85 million $3.07 18.50

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for MicroStrategy and Ebix, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MicroStrategy 0 4 1 0 2.20
Ebix 0 0 1 0 3.00

MicroStrategy currently has a consensus price target of $180.00, indicating a potential upside of 39.52%. Given MicroStrategy’s higher probable upside, research analysts clearly believe MicroStrategy is more favorable than Ebix.

Profitability

This table compares MicroStrategy and Ebix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MicroStrategy 16.37% 14.99% 10.84%
Ebix 30.69% 22.02% 11.93%

Dividends

Ebix pays an annual dividend of $0.30 per share and has a dividend yield of 0.5%. MicroStrategy does not pay a dividend. Ebix pays out 9.8% of its earnings in the form of a dividend.

Summary

Ebix beats MicroStrategy on 9 of the 15 factors compared between the two stocks.

About MicroStrategy

MicroStrategy Incorporated is a provider of enterprise software platforms around the world. The Company is engaged in the design, development, marketing and sales of its software platform through licensing arrangements, and cloud-based subscriptions and related services. It focuses on providing enterprise customers with software platform and services for deploying intelligence applications. Its platform, MicroStrategy 10, consolidates analytics and mobility in a single platform, available both as on-premise software and as a hosted service offering in MicroStrategy Cloud. Its enterprise platform combines business intelligence functionality with data discovery, mobile analytics and identity intelligence generated by digital credentials. MicroStrategy 10 consists of MicroStrategy Analytics, MicroStrategy Mobile and Usher. MicroStrategy Analytics offers solutions to organizations to analyze a range of data and distribute actionable business insight throughout an enterprise.

About Ebix

Ebix, Inc. (Ebix) is a supplier of software and e-commerce solutions to the insurance industry. Ebix provides application software products for the insurance industry, including carrier systems, agency systems and exchanges, as well as custom software development. Ebix conducts its operations through four channels, which include Exchanges, Carrier Systems, Broker Systems and Risk Compliance Solutions (RCS). Ebix operates data exchanges in the areas of life insurance, annuities, employee health benefits, risk management, workers compensation, and property and casualty (P&C) insurance. Ebix designs and deploys back-end systems for P&C insurance brokers across the world. Ebix also designs and deploys on-demand and back-end systems for P&C insurance companies. Ebix focus in RCS channel pertains to business process outsourcing services that include providing project management, time and material consulting to clients across the world, and claims adjudication/settlement services.

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