Financial Analysis: Medidata Solutions (MDSO) vs. Monotype Imaging (TYPE)

Medidata Solutions (NASDAQ: MDSO) and Monotype Imaging (NASDAQ:TYPE) are both technology companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

Dividends

Monotype Imaging pays an annual dividend of $0.45 per share and has a dividend yield of 1.9%. Medidata Solutions does not pay a dividend. Monotype Imaging pays out 166.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Medidata Solutions and Monotype Imaging’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Medidata Solutions 8.14% 11.59% 5.74%
Monotype Imaging 4.90% 6.10% 3.73%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Medidata Solutions and Monotype Imaging, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Medidata Solutions 0 2 11 0 2.85
Monotype Imaging 1 0 1 0 2.00

Medidata Solutions presently has a consensus price target of $83.00, suggesting a potential upside of 23.27%. Monotype Imaging has a consensus price target of $27.50, suggesting a potential upside of 13.40%. Given Medidata Solutions’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Medidata Solutions is more favorable than Monotype Imaging.

Risk & Volatility

Medidata Solutions has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Monotype Imaging has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Insider & Institutional Ownership

97.5% of Medidata Solutions shares are owned by institutional investors. Comparatively, 88.2% of Monotype Imaging shares are owned by institutional investors. 5.8% of Medidata Solutions shares are owned by company insiders. Comparatively, 2.3% of Monotype Imaging shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Medidata Solutions and Monotype Imaging’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Medidata Solutions $545.53 million 7.23 $44.38 million $0.74 90.99
Monotype Imaging $235.79 million 4.29 $11.56 million $0.27 89.81

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

Summary

Medidata Solutions beats Monotype Imaging on 15 of the 16 factors compared between the two stocks.

About Medidata Solutions

Medidata Solutions Inc. (Medidata) is a provider of cloud-based solutions for life sciences. The Company provides cloud-based solutions for clinical research in life sciences, offering platform technology that focuses on the clinical development. The Company’s plan study addresses three areas to ensure optimal study design, grant development and negotiation, and investigator payments. Study Design Optimization enables customers to gain visibility into the impact of protocol elements on resource and trial endpoints. Grants Manager compares specific industry benchmarks and analytics, using industry’s database of negotiated procedure costs, to support appropriate grants to investigator sites and automated negotiations with multiple investigator sites. Payments enables customers to establish a global investigator payment strategy and process to automate payment calculation, distribution and reporting, including tax and currency exchange calculations.

About Monotype Imaging

Monotype Imaging Holdings Inc. is engaged in the development, marketing and licensing of technologies and fonts. The Company empowers expression and engagement for creatives, designers, engineers and marketers. It organizes its business operations into two areas: creative professionals and original equipment manufacturer (OEM). For Creative Professional market, it provides content across multiple devices and mediums. Its solutions, which include type, branded mobile content, visual content marketing solutions, custom design services, and tools and technologies that enable the creative process, are licensed through its direct sales channel, e-commerce platforms and partner platforms. It also provides consumer device manufacturers and independent software vendors with the right solutions for delivering consistent, compelling user experiences. It works with a range of customers, including brands, agencies and publishers. As of December 31, 2016, it offered over 17,000 typeface designs.

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