Critical Analysis: Computer Programs and Systems (NASDAQ:CPSI) and Internap (INAP)

Internap (NASDAQ: INAP) and Computer Programs and Systems (NASDAQ:CPSI) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Earnings & Valuation

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This table compares Internap and Computer Programs and Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Internap $280.72 million 0.78 -$45.34 million ($1.55) -7.06
Computer Programs and Systems $276.93 million 1.50 -$17.10 million $1.33 22.22

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

Insider and Institutional Ownership

86.2% of Internap shares are owned by institutional investors. Comparatively, 90.6% of Computer Programs and Systems shares are owned by institutional investors. 3.7% of Internap shares are owned by company insiders. Comparatively, 4.8% of Computer Programs and Systems 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.

Analyst Ratings

This is a breakdown of current ratings and target prices for Internap and Computer Programs and Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Internap 0 0 1 1 3.50
Computer Programs and Systems 1 4 1 0 2.00

Internap currently has a consensus price target of $28.00, suggesting a potential upside of 155.94%. Computer Programs and Systems has a consensus price target of $30.60, suggesting a potential upside of 3.55%. Given Internap’s stronger consensus rating and higher probable upside, research analysts clearly believe Internap is more favorable than Computer Programs and Systems.

Dividends

Computer Programs and Systems pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. Internap does not pay a dividend. Computer Programs and Systems pays out 30.1% of its earnings in the form of a dividend.

Risk and Volatility

Internap has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500. Comparatively, Computer Programs and Systems has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500.

Profitability

This table compares Internap and Computer Programs and Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Internap -16.15% -271.76% -5.53%
Computer Programs and Systems -6.29% 12.06% 5.47%

Summary

Computer Programs and Systems beats Internap on 10 of the 16 factors compared between the two stocks.

About Internap

Internap Corporation is a technology provider of Internet infrastructure. The Company provides Internet infrastructure through both Colocation Business and Enterprise Services and Cloud Services. The Company operates through two segments: Data Center and Network Services, and Cloud and Hosting Services. Its Data Center and Network Services segment consists of colocation and Internet Protocol (IP) connectivity services. Colocation involves providing physical space within data centers and associated services, such as power, interconnection, environmental controls, monitoring and security while allowing its customers to deploy and manage their servers, storage and other equipment in its secure data centers. Its cloud and hosting services segment consists of hosted Infrastructure-as-a-Service as a cloud platform or through managed hosting. For both Infrastructure-as-a-Service options, the Company provides and maintains the hardware, data center infrastructure and interconnection.

About Computer Programs and Systems

Computer Programs and Systems, Inc. provides healthcare information technology solutions and services in the United States and the Caribbean nation of St. Maarten. Its software systems include patient management software that enables a hospital to identify a patient at various points in the healthcare delivery system, as well as helps to collect and maintain patient information throughout the process of patient care; and financial accounting software, which offers business office applications to track and coordinate information needed for managerial decision-making. The company also provides clinical software that automates record keeping and reporting for various clinical functions; patient care applications; and enterprise applications that support its products for use in various areas of the hospital. In addition, it offers Healthland Centriq, a Web-based electronic health record platform that centralizes data from various care areas; and Healthland Classic that offers a suite of integrated applications for managing operations, resources, and people, as well as for ambulatory information management solutions. Further, the company provides software solutions that promote data-driven clinical and financial outcomes for customers in the post-acute care industry; software application support, hardware maintenance, and education and related services; business management, consulting, and managed information technology services for community healthcare enterprises. Additionally, it provides Software as a Service based healthcare revenue cycle management solutions; system implementation and training services; and forms and office supplies. It serves community hospitals and physician clinics, skilled nursing and assisted living facilities, and small specialty hospitals. Computer Programs and Systems, Inc. was founded in 1979 and is based in Mobile, Alabama.

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