Head-To-Head Contrast: CDK Global (CDK) vs. The Competition

CDK Global (NASDAQ: CDK) is one of 103 publicly-traded companies in the “Enterprise Software” industry, but how does it contrast to its competitors? We will compare CDK Global to similar companies based on the strength of its analyst recommendations, institutional ownership, dividends, risk, earnings, valuation and profitability.

Risk and Volatility

CDK Global has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500. Comparatively, CDK Global’s competitors have a beta of 1.06, indicating that their average share price is 5% more volatile than the S&P 500.

Dividends

CDK Global pays an annual dividend of $0.60 per share and has a dividend yield of 0.8%. CDK Global pays out 29.1% of its earnings in the form of a dividend. As a group, “Enterprise Software” companies pay a dividend yield of 0.8% and pay out 32.7% of their earnings in the form of a dividend. CDK Global is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares CDK Global and its competitors gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
CDK Global $2.22 billion $295.60 million 34.34
CDK Global Competitors $1.76 billion $288.64 million 50.66

CDK Global has higher revenue and earnings than its competitors. CDK Global is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares CDK Global and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CDK Global 13.42% 515.77% 13.57%
CDK Global Competitors -22.31% -213.12% -7.21%

Insider & Institutional Ownership

86.8% of CDK Global shares are owned by institutional investors. Comparatively, 59.8% of shares of all “Enterprise Software” companies are owned by institutional investors. 0.4% of CDK Global shares are owned by company insiders. Comparatively, 23.2% of shares of all “Enterprise Software” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for CDK Global and its competitors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CDK Global 0 1 3 0 2.75
CDK Global Competitors 377 2213 4152 120 2.59

CDK Global presently has a consensus target price of $73.00, suggesting a potential upside of 3.21%. As a group, “Enterprise Software” companies have a potential upside of 6.06%. Given CDK Global’s competitors higher possible upside, analysts plainly believe CDK Global has less favorable growth aspects than its competitors.

Summary

CDK Global beats its competitors on 10 of the 15 factors compared.

About CDK Global

CDK Global, Inc. provides integrated information technology and digital marketing solutions. The Company’s segments include Retail Solutions North America, Advertising North America and CDK International. Through its Retail Solutions North America segment, the Company provides technology-based solutions, including automotive Website platforms, that help automotive retailers, original equipment manufacturers (OEMs) and other industry participants manage the acquisition, sale, financing, insuring, parts supply, repair and maintenance of vehicles. Through its Advertising North America segment, the Company provides advertising solutions, including management of digital advertising spend, for OEMs and automotive retailers. As of June 30, 2016, through its CDK International segment, it provided technology-based solutions similar to the retail solutions provided in its Retail Solutions North America segment in approximately 100 countries outside of the United States and Canada.

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