Medidata Solutions (NASDAQ: MDSO) and Liquidity Services (NASDAQ:LQDT) are both medical companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Earnings & Valuation

This table compares Medidata Solutions and Liquidity Services’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Medidata Solutions $508.77 million 8.90 $76.83 million $0.62 128.94
Liquidity Services $287.16 million 0.64 -$24.12 million ($2.55) -2.29

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

Profitability

This table compares Medidata Solutions and Liquidity Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Medidata Solutions 7.07% 11.14% 5.49%
Liquidity Services -27.52% -16.59% -10.35%

Institutional & Insider Ownership

97.5% of Medidata Solutions shares are owned by institutional investors. Comparatively, 67.6% of Liquidity Services shares are owned by institutional investors. 5.8% of Medidata Solutions shares are owned by insiders. Comparatively, 22.3% of Liquidity Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Medidata Solutions and Liquidity Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Medidata Solutions 0 2 9 0 2.82
Liquidity Services 0 1 0 0 2.00

Medidata Solutions currently has a consensus target price of $84.64, indicating a potential upside of 5.87%. Given Medidata Solutions’ stronger consensus rating and higher possible upside, equities analysts plainly believe Medidata Solutions is more favorable than Liquidity Services.

Risk and Volatility

Medidata Solutions has a beta of 1.77, suggesting that its stock price is 77% more volatile than the S&P 500. Comparatively, Liquidity Services has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Summary

Medidata Solutions beats Liquidity Services on 12 of the 13 factors compared between the two stocks.

About Medidata Solutions

Medidata Solutions Inc. (Medidata) is a provider of cloud-based solutions for life sciences. The Company provides cloud-based solutions for clinical research in life sciences, offering platform technology that focuses on the clinical development. The Company’s plan study addresses three areas to ensure optimal study design, grant development and negotiation, and investigator payments. Study Design Optimization enables customers to gain visibility into the impact of protocol elements on resource and trial endpoints. Grants Manager compares specific industry benchmarks and analytics, using industry’s database of negotiated procedure costs, to support appropriate grants to investigator sites and automated negotiations with multiple investigator sites. Payments enables customers to establish a global investigator payment strategy and process to automate payment calculation, distribution and reporting, including tax and currency exchange calculations.

About Liquidity Services

Liquidity Services, Inc. operates a network of e-commerce marketplaces that enable buyers and sellers to transact in an automated environment. The Company employs e-commerce marketplace solutions to manage, value and sell inventory and equipment for business and government clients. The Company’s marketplaces provide professional buyers access to a global supply of new, surplus and scrap assets presented with digital images and other relevant product information. Additionally, the Company enables its corporate and government sellers to enhance their financial return on assets offered for sale by providing a liquid marketplace and value-added services. The Company’s range of services include program management, valuation, asset management, reconciliation, Return to Vendor and Returns Management Authorization (RTV and RMA), refurbishment and recycling, fulfillment, marketing and sales, warehousing and transportation, buyer customer support, and compliance and risk mitigation.

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