Ebix (EBIX) & CDK Global (CDK) Head to Head Review

Ebix (NASDAQ: EBIX) and CDK Global (NASDAQ:CDK) are both mid-cap technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, earnings, risk, valuation and dividends.

Risk & Volatility

Ebix has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500. Comparatively, CDK Global has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Institutional and Insider Ownership

62.9% of Ebix shares are held by institutional investors. Comparatively, 89.6% of CDK Global shares are held by institutional investors. 13.8% of Ebix shares are held by company insiders. Comparatively, 0.4% of CDK Global shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Ebix and CDK Global’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ebix $298.29 million 9.15 $93.84 million $3.09 28.07
CDK Global $2.22 billion 4.26 $295.60 million $2.26 31.08

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

Dividends

Ebix pays an annual dividend of $0.30 per share and has a dividend yield of 0.3%. CDK Global pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. Ebix pays out 9.7% of its earnings in the form of a dividend. CDK Global pays out 26.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a summary of current recommendations and price targets for Ebix and CDK Global, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ebix 0 0 3 0 3.00
CDK Global 0 2 2 0 2.50

Ebix presently has a consensus target price of $88.50, suggesting a potential upside of 2.02%. CDK Global has a consensus target price of $76.00, suggesting a potential upside of 8.19%. Given CDK Global’s higher probable upside, analysts plainly believe CDK Global is more favorable than Ebix.

Profitability

This table compares Ebix and CDK Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ebix 29.08% 21.31% 11.06%
CDK Global 14.29% -5,261.95% 14.12%

Summary

Ebix beats CDK Global on 10 of the 16 factors compared between the two stocks.

About Ebix

Ebix, Inc. (Ebix) is a supplier of software and e-commerce solutions to the insurance industry. Ebix provides application software products for the insurance industry, including carrier systems, agency systems and exchanges, as well as custom software development. Ebix conducts its operations through four channels, which include Exchanges, Carrier Systems, Broker Systems and Risk Compliance Solutions (RCS). Ebix operates data exchanges in the areas of life insurance, annuities, employee health benefits, risk management, workers compensation, and property and casualty (P&C) insurance. Ebix designs and deploys back-end systems for P&C insurance brokers across the world. Ebix also designs and deploys on-demand and back-end systems for P&C insurance companies. Ebix focus in RCS channel pertains to business process outsourcing services that include providing project management, time and material consulting to clients across the world, and claims adjudication/settlement services.

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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