Critical Analysis: Cardtronics (CATM) vs. WageWorks (WAGE)

Cardtronics (NASDAQ: CATM) and WageWorks (NYSE:WAGE) are both business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.

Valuation and Earnings

This table compares Cardtronics and WageWorks’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cardtronics $1.27 billion 0.67 $87.99 million ($2.99) -6.22
WageWorks $364.71 million 6.90 $20.20 million $1.17 54.23

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

Risk and Volatility

Cardtronics has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, WageWorks has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Cardtronics and WageWorks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cardtronics 0 3 2 0 2.40
WageWorks 0 1 4 0 2.80

Cardtronics presently has a consensus target price of $37.00, suggesting a potential upside of 98.92%. WageWorks has a consensus target price of $83.00, suggesting a potential upside of 30.81%. Given Cardtronics’ higher possible upside, analysts clearly believe Cardtronics is more favorable than WageWorks.

Profitability

This table compares Cardtronics and WageWorks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cardtronics -9.37% 29.32% 7.19%
WageWorks 9.87% 9.60% 3.37%

Summary

WageWorks beats Cardtronics on 7 of the 12 factors compared between the two stocks.

Cardtronics Company Profile

Cardtronics plc, formerly Cardtronics, Inc., provides automated consumer financial services through its network of automated teller machines (ATMS) and multi-function financial services kiosks. The Company’s operations consists of its North America, Europe, and Corporate & Other segments. Its ATM operations in the United States, Canada, Mexico and Puerto Rico are included in its North America segment. Its ATM operations in the United Kingdom, Ireland, Germany, Poland, Spain and i-design are included in its Europe segment. Its transaction processing operations, which service its North American and European operations, along with external customers, and the Company’s corporate general and administrative functions comprise the Corporate & Other segment. As of December 31, 2016, it provided services to approximately 203,000 ATMs throughout the United States (including the United States territory of Puerto Rico), the United Kingdom, Ireland, Germany, Poland, Spain, Canada and Mexico.

WageWorks Company Profile

WageWorks, Inc. is engaged in administering Consumer-Directed Benefits (CDBs). The Company administers CBDs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, Consolidated Omnibus Budget Reconciliation Act (COBRA) and other employee benefits. Its CDB programs assist employees and their families in saving money by using pre-tax dollars to pay for certain of their healthcare, dependent care and commuter expenses. Employers financially benefit from its programs through reduced payroll taxes. It provides operational support services to its clients and its cross-functional teams, including customer support and claims processing. It administers HSAs for employers that allow employee participants to invest funds to be used for qualified healthcare expenses.

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