Advanced Disposal Services (NYSE: ADSW) and Vertex Energy (NASDAQ:VTNR) are both small-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Profitability

This table compares Advanced Disposal Services and Vertex Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Advanced Disposal Services -1.61% 5.84% 1.41%
Vertex Energy -7.73% -30.22% -12.58%

Earnings and Valuation

This table compares Advanced Disposal Services and Vertex Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Advanced Disposal Services $1.40 billion 1.42 -$30.40 million ($0.28) -80.43
Vertex Energy $98.08 million 0.28 -$3.95 million ($0.51) -1.63

Vertex Energy has lower revenue, but higher earnings than Advanced Disposal Services. Advanced Disposal Services is trading at a lower price-to-earnings ratio than Vertex Energy, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Advanced Disposal Services and Vertex Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advanced Disposal Services 0 2 6 0 2.75
Vertex Energy 0 1 0 0 2.00

Advanced Disposal Services currently has a consensus target price of $26.00, indicating a potential upside of 15.45%. Vertex Energy has a consensus target price of $1.00, indicating a potential upside of 20.48%. Given Vertex Energy’s higher probable upside, analysts plainly believe Vertex Energy is more favorable than Advanced Disposal Services.

Institutional & Insider Ownership

96.5% of Advanced Disposal Services shares are owned by institutional investors. Comparatively, 19.1% of Vertex Energy shares are owned by institutional investors. 1.2% of Advanced Disposal Services shares are owned by company insiders. Comparatively, 31.0% of Vertex Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Advanced Disposal Services has a beta of -0.67, indicating that its stock price is 167% less volatile than the S&P 500. Comparatively, Vertex Energy has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Summary

Advanced Disposal Services beats Vertex Energy on 9 of the 13 factors compared between the two stocks.

About Advanced Disposal Services

Advanced Disposal Services, Inc. is an integrated provider of non-hazardous solid waste collection, transfer, recycling and disposal services operating primarily in secondary markets or under exclusive arrangements. The Company’s segments include South, East, Midwest and Corporate. As of December 31, 2016, the Company had its presence in 16 states across the Midwest, South and East regions of the United States, as well as in the Commonwealth of the Bahamas, served approximately 2.7 million residential customers and over 200,000 commercial and industrial (C&I) customers through its network of 90 collection operations, 72 transfer stations, 21 owned or operated recycling facilities and 39 owned or operated active landfills. The Company’s vertically integrated environmental services operations can be classified into three lines of business: collection services, disposal services and recycling services. The disposal services include transfer stations and landfills.

About Vertex Energy

Vertex Energy, Inc. is an environmental services company that recycles industrial waste streams and off-specification commercial chemical products. The Company focuses on recycling used motor oil and other petroleum by-products. The Company’s segments include the Black Oil, Refining and Marketing, and Recovery divisions. The Company’s product categories include Used Motor Oil, Fuel Oil, pyrolysis gasoline (Pygas), Gasoline Blendstock and Base Oil. The Black Oil division is engaged in operations across the used motor oil recycling value chain, including collection, aggregation, transportation, storage, refinement and sales of aggregated feedstock and re-refined products to end users. The Refining and Marketing division is engaged in the aggregation of feedstock, re-refining it into end products, and selling these products to customers. The Recovery division is a provider of generator solutions for the recovery and management of hydrocarbon streams.

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