Liberty Tax (NASDAQ: TAX) and PRGX Global (NASDAQ:PRGX) are both small-cap business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitabiliy, dividends and analyst recommendations.

Insider & Institutional Ownership

45.8% of Liberty Tax shares are owned by institutional investors. Comparatively, 71.7% of PRGX Global shares are owned by institutional investors. 46.8% of Liberty Tax shares are owned by insiders. Comparatively, 15.0% of PRGX Global shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Liberty Tax pays an annual dividend of $0.64 per share and has a dividend yield of 4.6%. PRGX Global does not pay a dividend. Liberty Tax pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Liberty Tax and PRGX Global, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty Tax 0 0 0 0 N/A
PRGX Global 0 0 2 0 3.00

PRGX Global has a consensus target price of $8.00, indicating a potential upside of 33.33%. Given PRGX Global’s higher probable upside, analysts clearly believe PRGX Global is more favorable than Liberty Tax.

Profitability

This table compares Liberty Tax and PRGX Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Liberty Tax 7.48% 15.84% 6.91%
PRGX Global -0.55% 0.30% 0.17%

Risk and Volatility

Liberty Tax has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, PRGX Global has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Valuation and Earnings

This table compares Liberty Tax and PRGX Global’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Liberty Tax $173.99 million 1.11 $41.25 million $0.83 16.75
PRGX Global $146.40 million 0.92 $8.38 million ($0.03) -199.93

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

Summary

Liberty Tax beats PRGX Global on 9 of the 15 factors compared between the two stocks.

Liberty Tax Company Profile

Liberty Tax, Inc. is the holding company for JTH Tax, Inc. The Company is a provider of tax preparation services. The Company provides retail federal and state income tax preparation services and related tax settlement products in the United States and Canada. The Company’s tax preparation services and related tax settlement products are offered primarily through franchised locations. All of the Company’s offices are operated under the Liberty Tax Service and SiempreTax+ brands. The Company also provides an online digital Do-It-Yourself (DIY) tax program in the United States. The Company offers two types of tax settlement financial products: refund transfer products, which include providing a means by which a customer receives his or her refund, and refund-based loans. The Company’s LibTax software allows tax customers to have their federal and state income tax returns filed electronically.

PRGX Global Company Profile

PRGX Global, Inc. (PRGX), together with its subsidiaries, provides recovery audit and spend analytics services. The Company provides recovery audit, procure-to-pay performance improvement, spend analytics and risk management services principally to large businesses and government agencies. The Company operates through three segments: Recovery Audit Services-Americas, Recovery Audit Services-Europe/Asia-Pacific and Adjacent Services. The Recovery Audit Services-Americas segment represents recovery audit services the Company provides in the United States, Canada and Latin America. The Recovery Audit Services-Europe/Asia-Pacific segment represents recovery audit services it provides in Europe, Asia and the Pacific region. The Adjacent Services segment includes spend analytics (data transformation and cost harmonization), Supplier Information Management (SIM) and Chartered Institute of Purchasing & Supply (CIPS) Sustainability Index (CSI).

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