Financial Review: Godaddy (GDDY) vs. DST Systems (NYSE:DST)

DST Systems (NYSE: DST) and Godaddy (NYSE:GDDY) are both mid-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Earnings and Valuation

This table compares DST Systems and Godaddy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DST Systems $1.56 billion 2.37 $427.30 million $6.78 9.03
Godaddy $1.85 billion 4.16 -$16.50 million $0.26 177.28

DST Systems has higher earnings, but lower revenue than Godaddy. DST Systems is trading at a lower price-to-earnings ratio than Godaddy, indicating that it is currently the more affordable of the two stocks.

Dividends

DST Systems pays an annual dividend of $0.72 per share and has a dividend yield of 1.2%. Godaddy does not pay a dividend. DST Systems pays out 10.6% of its earnings in the form of a dividend.

Profitability

This table compares DST Systems and Godaddy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DST Systems 21.26% 16.20% 6.60%
Godaddy 2.34% 7.89% 0.97%

Institutional and Insider Ownership

85.8% of DST Systems shares are held by institutional investors. Comparatively, 84.3% of Godaddy shares are held by institutional investors. 1.8% of DST Systems shares are held by insiders. Comparatively, 22.7% of Godaddy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

DST Systems has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, Godaddy has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for DST Systems and Godaddy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DST Systems 0 1 2 0 2.67
Godaddy 0 3 11 0 2.79

DST Systems currently has a consensus price target of $68.33, indicating a potential upside of 11.71%. Godaddy has a consensus price target of $50.00, indicating a potential upside of 8.48%. Given DST Systems’ higher possible upside, equities research analysts plainly believe DST Systems is more favorable than Godaddy.

Summary

DST Systems beats Godaddy on 9 of the 16 factors compared between the two stocks.

About DST Systems

DST Systems, Inc. (DST) is a provider of technology-based information processing and servicing solutions. The Company offers its solutions through data management, business processing and customer communications solutions to clients within the asset management, brokerage, retirement and healthcare markets. The Company operates through two segments: Financial Services and Healthcare Services. Through the Financial Services segment, DST provides investor, investment, advisor/intermediary and asset distribution services to companies within the financial services industry. The Healthcare Services segment uses the Company’s software applications to provide healthcare organizations a range of medical and pharmacy benefit solutions to aid their information processing, quality of care, cost management and payment integrity needs. Its investments in equity securities, private equity investments, real estate and certain financial interests are aggregated into an Investments and Other segment.

About Godaddy

GoDaddy Inc. is a technology provider to small businesses, Web design professionals and individuals. The Company delivers cloud-based products and personalized customer care. It operates a domain marketplace, where its customers can find the digital real estate that matches their idea. It provides Website building, hosting and security tools to help customers construct and protect online presence. It provides applications that enable connecting to customers and managing businesses. The Company provides search, discovery and recommendation tools, as well as a selection of domain name for ventures. It provides productivity tools, such as domain-specific e-mail, online storage, invoicing, bookkeeping and payment solutions to run ventures, as well as marketing products. The Company’s products, including GoCentral enable to build a Website or online store for both desktop and mobile. Its products are powered by a cloud platform and enable its customers to get found online.

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