Critical Review: SPS Commerce (SPSC) vs. The Competition

SPS Commerce (NASDAQ: SPSC) is one of 182 publicly-traded companies in the “Prepackaged software” industry, but how does it weigh in compared to its competitors? We will compare SPS Commerce to similar companies based on the strength of its institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Profitability

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This table compares SPS Commerce and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SPS Commerce -1.11% 2.81% 2.35%
SPS Commerce Competitors -5.80% -80.72% -2.05%

Insider & Institutional Ownership

98.4% of SPS Commerce shares are owned by institutional investors. Comparatively, 59.8% of shares of all “Prepackaged software” companies are owned by institutional investors. 2.8% of SPS Commerce shares are owned by company insiders. Comparatively, 21.9% of shares of all “Prepackaged software” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

SPS Commerce has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, SPS Commerce’s competitors have a beta of -17.32, meaning that their average share price is 1,832% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for SPS Commerce and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SPS Commerce 1 2 5 0 2.50
SPS Commerce Competitors 1056 5522 11467 441 2.61

SPS Commerce presently has a consensus target price of $68.17, suggesting a potential upside of 3.11%. As a group, “Prepackaged software” companies have a potential upside of 2.24%. Given SPS Commerce’s higher probable upside, equities analysts plainly believe SPS Commerce is more favorable than its competitors.

Earnings & Valuation

This table compares SPS Commerce and its competitors gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
SPS Commerce $220.57 million -$2.44 million 157.40
SPS Commerce Competitors $1.67 billion $249.32 million -1.06

SPS Commerce’s competitors have higher revenue and earnings than SPS Commerce. SPS Commerce is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Summary

SPS Commerce beats its competitors on 8 of the 13 factors compared.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It provides solutions through the SPS Commerce platform, a cloud-based product suite that enhances the way retailers, suppliers, distributors, logistics firms, and other trading partners manage and fulfill orders, manage sell-through performance, and source new items. The company offers Trading Partner Fulfillment solution, which provides fulfillment automation and replaces or augments an organization's existing trading partner electronic communication infrastructure; Trading Partner Analytics solution that comprises data analytics applications to enhance visibility and analysis of customers supply chains; and Trading Partner Assortment solution to manage individual attributes associated with each item a retailer or supplier sells. It also provides Trading Partner Sourcing solution that enables retailers to source providers of new items, suppliers to connect with new retailers, and retailing community; Trading Partner Community Development solution, which offers communications programs that enables retailers, suppliers, and emerging providers of value-added products and services to establish trading partner relationships with new trading partners to expand their businesses; and Other Trading Partner Solutions, such as barcode labeling, planogram services, and scan and pack application that helps trading partners process information to streamline the picking and packaging process. The company sells its solutions primarily through retail sales professionals and supplier sales representatives to small- to mid-sized suppliers in the consumer packaged goods industry, as well as retailers, distributors, third-party logistics providers, and other trading partners. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

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