NIC (EGOV) vs. Yelp (YELP) Critical Analysis

NIC (NASDAQ: EGOV) and Yelp (NYSE:YELP) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for NIC and Yelp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NIC 1 5 1 0 2.00
Yelp 0 18 17 0 2.49

NIC currently has a consensus price target of $19.33, indicating a potential upside of 10.48%. Yelp has a consensus price target of $40.79, indicating a potential downside of 6.55%. Given NIC’s higher probable upside, research analysts clearly believe NIC is more favorable than Yelp.

Profitability

This table compares NIC and Yelp’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%
Yelp 1.67% 1.60% 1.45%

Volatility and Risk

NIC has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500. Comparatively, Yelp has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500.

Dividends

NIC pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. Yelp does not pay a dividend. NIC pays out 38.1% of its earnings in the form of a dividend.

Insider & Institutional Ownership

92.9% of NIC shares are held by institutional investors. Comparatively, 90.9% of Yelp shares are held by institutional investors. 4.1% of NIC shares are held by insiders. Comparatively, 10.1% of Yelp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NIC $327.22 million 3.54 $83.34 million $0.84 20.83
Yelp $787.22 million 4.54 $43.09 million $0.15 291.00

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

Yelp Company Profile

Yelp Inc. (Yelp) connects people with local businesses by bringing ‘word of mouth’ online and providing a platform for businesses and consumers to engage and transact. The Company offers local business review sites. Yelp provides a platform for consumers to share their everyday local business experiences with other consumers by posting reviews, tips, photos and videos, and to engage directly with businesses, through reviews, its Request-A-Quote and Message the Business features, and by completing transactions on the Yelp Platform. Yelp also provides businesses of all sizes with a range of free and paid services that help them engage with consumers. The Yelp Platform allows consumers to transact with local businesses directly on Yelp through Yelp Eat24, the food ordering and delivery business; Yelp Reservations, its online reservations product, and integrations with partners ranging from Shoptiques.com (boutique shopping) to GolfNow (tee time booking) to BloomNation (flower ordering).

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