Critical Survey: Liberty Tax Service (TAX) and TiVo (TIVO)

Liberty Tax Service (NASDAQ: TAX) and TiVo (NASDAQ:TIVO) are both small-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Dividends

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Liberty Tax Service pays an annual dividend of $0.64 per share and has a dividend yield of 6.3%. TiVo pays an annual dividend of $0.72 per share and has a dividend yield of 4.9%. Liberty Tax Service pays out 55.7% of its earnings in the form of a dividend. TiVo pays out 73.5% 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. Liberty Tax Service is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Liberty Tax Service and TiVo’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Liberty Tax Service $173.99 million 0.74 $13.01 million $1.15 8.83
TiVo $826.46 million 2.16 -$37.95 million $0.98 14.85

Liberty Tax Service has higher earnings, but lower revenue than TiVo. Liberty Tax Service is trading at a lower price-to-earnings ratio than TiVo, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Liberty Tax Service has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, TiVo has a beta of -0.21, meaning that its stock price is 121% less volatile than the S&P 500.

Profitability

This table compares Liberty Tax Service and TiVo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Liberty Tax Service 7.25% 14.97% 6.66%
TiVo -4.59% 4.02% 2.34%

Analyst Ratings

This is a summary of recent recommendations for Liberty Tax Service and TiVo, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty Tax Service 0 1 0 0 2.00
TiVo 0 0 5 0 3.00

TiVo has a consensus target price of $23.50, suggesting a potential upside of 61.51%. Given TiVo’s stronger consensus rating and higher probable upside, analysts plainly believe TiVo is more favorable than Liberty Tax Service.

Institutional and Insider Ownership

48.0% of Liberty Tax Service shares are held by institutional investors. Comparatively, 92.2% of TiVo shares are held by institutional investors. 40.4% of Liberty Tax Service shares are held by company insiders. Comparatively, 3.5% of TiVo shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Liberty Tax Service beats TiVo on 9 of the 16 factors compared between the two stocks.

About Liberty Tax Service

Liberty Tax, Inc., together with its subsidiaries, provides tax preparation services and solutions in the United States and Canada. The company also facilitates refund-based tax settlement financial products, such as refund transfer products, refund-based loans, and personal income tax refund discounting, as well as provides an online digital Do-It-Yourself tax program in the United States. Its customers include taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services. Liberty Tax, Inc. offers its products and services through a network of company-owned offices and franchised locations under the Liberty Tax, Liberty Tax Service, Liberty Income Tax, Liberty Canada, and SiempreTax+ brand names. The company was formerly known as JTH Holding, Inc. and changed its name to Liberty Tax, Inc. in July 2014. Liberty Tax, Inc. was founded in 1996 and is headquartered in Virginia Beach, Virginia.

About TiVo

TiVo Corporation provides entertainment technology and audience insights worldwide. Its Intellectual Property Licensing segment licenses its patent portfolio to multi-channel video service providers, including cable, satellite, and Internet-protocol television providers; set-top box manufacturers; and interactive television software and program guide providers in the online, over-the-top (OTT) video, and mobile phone businesses, as well as consumer electronics (CE) manufacturers. This segment's portfolio of licensable technology patents covers various aspects of content discovery, digital video recorder (DVR), video-on-demand (VOD), OTT experiences, multi-screen functionality, and personalization, as well as interactive applications and advertising. The company's Product segment offers platform solutions, such as TiVo Service Platform, a cloud-based service that powers the TiVo Service client software, which operates on set-top boxes in consumer homes, as well as applications that operate on third party software platforms, such as iOS and Android; interactive program guide (IPG) solutions that allow service providers to customize elements of the IPGs for their customers, and to upgrade the features and services they can offer; CE Guides under the G-GUIDE and HTML Guide brands; and CubiTV and TiVo Lite middleware solutions. It also provides television, sports, movies, music, celebrities, books, and video games metadata; advanced search, recommendation, and conversation services; data and analytics solutions; Ad Optimizer and Promotion Optimizer, browser based software-as-a-service applications; operator and seamless insights applications; IPG advertising services; analog content protection technologies; and VCR Plus+, connected platform, and media recognition products. The company was formerly known as Rovi Corporation and changed its name to TiVo Corporation in September 2016. TiVo Corporation was founded in 1983 and is headquartered in San Carlos, California.

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