NIC (NASDAQ: EGOV) and TrueCar (NASDAQ:TRUE) are both small-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, institutional ownership, earnings and risk.

Institutional & Insider Ownership

92.9% of NIC shares are held by institutional investors. Comparatively, 91.7% of TrueCar shares are held by institutional investors. 4.1% of NIC shares are held by insiders. Comparatively, 15.5% of TrueCar shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

NIC pays an annual dividend of $0.32 per share and has a dividend yield of 1.9%. TrueCar does not pay a dividend. NIC pays out 38.1% of its earnings in the form of a dividend.

Profitability

This table compares NIC and TrueCar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NIC 17.31% 38.37% 23.00%
TrueCar -9.86% -11.00% -8.49%

Valuation & Earnings

This table compares NIC and TrueCar’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NIC $327.22 million 3.40 $83.34 million $0.84 20.00
TrueCar $306.80 million 5.31 -$16.51 million ($0.35) -47.26

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

Volatility & Risk

NIC has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500. Comparatively, TrueCar has a beta of 3, meaning that its stock price is 200% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for NIC and TrueCar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NIC 1 5 1 0 2.00
TrueCar 1 2 7 0 2.60

NIC currently has a consensus price target of $19.67, suggesting a potential upside of 17.06%. TrueCar has a consensus price target of $18.50, suggesting a potential upside of 11.85%. Given NIC’s higher probable upside, research analysts plainly believe NIC is more favorable than TrueCar.

Summary

NIC beats TrueCar on 9 of the 15 factors compared between the two stocks.

NIC Company Profile

NIC Inc. is a provider of digital government services that help governments use technology to provide services to businesses and citizens. The Company operates through Outsourced Portals segment. The Company offers its services through two channels: primary outsourced portal businesses, and software and services businesses. In the primary outsourced portal businesses, the Company enters into contracts with state and local governments to design, build, and operate Internet-based, enterprise-wide portals on their behalf. Its software and services businesses include its subsidiaries that provide software development and payment processing services, other than outsourced portal services, to state and local governments, as well as federal agencies. The Company’s outsourced portal businesses include interactive government services (IGS), driver history records (DHR), Portal software development and services, and Portal management.

TrueCar Company Profile

TrueCar, Inc. is an Internet-based information, technology, and communication services company. The Company has a data-driven online platform, which features market data and analytics. The Company-branded platform is available on its TrueCar Website and mobile applications. It customizes and operates its platform on a co-branded basis for its affinity group marketing partners, including financial institutions, membership-based organizations, and employee buying programs for a range of enterprises. The Company enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar Certified Dealers. Its network of over 13,000 TrueCar Certified Dealers consists primarily of new car franchises, as well as independent dealers selling used vehicles. Its subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time.

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