eGain Corporation (NASDAQ: EGAN) and ARI Network Services (NASDAQ:ARIS) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Profitability

This table compares eGain Corporation and ARI Network Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
eGain Corporation -10.34% N/A -14.94%
ARI Network Services 11.55% 18.27% 9.56%

Institutional and Insider Ownership

47.8% of eGain Corporation shares are held by institutional investors. Comparatively, 36.1% of ARI Network Services shares are held by institutional investors. 39.0% of eGain Corporation shares are held by insiders. Comparatively, 8.7% of ARI Network Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for eGain Corporation and ARI Network Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
eGain Corporation 0 2 1 0 2.33
ARI Network Services 1 1 0 0 1.50

eGain Corporation presently has a consensus price target of $2.93, indicating a potential downside of 3.83%. Given eGain Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe eGain Corporation is more favorable than ARI Network Services.

Valuation and Earnings

This table compares eGain Corporation and ARI Network Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
eGain Corporation $58.22 million 1.43 -$526,000.00 ($0.22) -13.86
ARI Network Services $51.16 million 2.42 $6.53 million $0.14 50.68

ARI Network Services has higher revenue, but lower earnings than eGain Corporation. eGain Corporation is trading at a lower price-to-earnings ratio than ARI Network Services, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

eGain Corporation has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, ARI Network Services has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Summary

eGain Corporation beats ARI Network Services on 7 of the 13 factors compared between the two stocks.

eGain Corporation Company Profile

eGain Corporation (eGain) provides cloud-based and on-site customer engagement software solutions. The Company optimizes service processes across the Web, social and phone channels. The Company’s solutions help business to consumer (B2C) businesses to operationalize digital customer engagement strategies. The Company is engaged in the development, license, implementation and support of customer service infrastructure software solutions. The Company offers eGain solution, which is designed for B2C businesses to do business with their customers. The Company offers eGain OpenCEH, which is an engagement hub platform. The eGain suite includes Mobile applications; Social applications; Web applications; Desktop applications; Management applications and analytics; Messaging applications; eGain OpenCEH, and eGain Connectors. It provides analytics capability to various contact centers for intra-day resource measurement and management, managing operational agility, and agent productivity.

ARI Network Services Company Profile

ARI Network Services, Inc. (ARI) provides Website, software and data solutions. The Company’s solutions include Lead Generation and eCommerce Websites, eCatalogs, Business Management Software, Digital Marketing Services. It offers a menu of Website add-ons, including a mobile inventory management application, third-party inventory integrations and business management integrations. Its eCatalog solutions offer access to its library of electronic product content through a suite of software-as-a-service (SaaS) and data-as-a-service (DaaS) solutions. Its Business Management Software solutions are offered in the automotive tire and wheel aftermarket (ATW) aftermarket under the TCS Technologies, an ARI Company brand name. ARI’s Digital Marketing Services include search engine optimization, e-mail marketing, search engine marketing (PPC), online reputation management and online directory management. The Company’s other solutions include software, professional services and hosting services.

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