Critical Survey: SPS Commerce (SPSC) and ImageWare Systems (IWSY)

SPS Commerce (NASDAQ: SPSC) and ImageWare Systems (OTCMKTS:IWSY) are both small-cap business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, risk, dividends, institutional ownership and profitability.

Risk & Volatility

SPS Commerce has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, ImageWare Systems has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Earnings & Valuation

This table compares SPS Commerce and ImageWare Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SPS Commerce $220.57 million 5.52 -$2.44 million $0.42 167.12
ImageWare Systems $4.29 million 32.29 -$10.06 million ($0.15) -9.80

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

Institutional and Insider Ownership

99.6% of SPS Commerce shares are owned by institutional investors. Comparatively, 38.9% of ImageWare Systems shares are owned by institutional investors. 2.8% of SPS Commerce shares are owned by insiders. Comparatively, 47.7% of ImageWare Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares SPS Commerce and ImageWare Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SPS Commerce -0.95% 3.01% 2.52%
ImageWare Systems -234.50% N/A -117.02%

Analyst Ratings

This is a summary of recent ratings for SPS Commerce and ImageWare Systems, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SPS Commerce 0 2 6 0 2.75
ImageWare Systems 0 0 1 0 3.00

SPS Commerce presently has a consensus price target of $73.00, suggesting a potential upside of 4.00%. ImageWare Systems has a consensus price target of $4.25, suggesting a potential upside of 189.12%. Given ImageWare Systems’ stronger consensus rating and higher possible upside, analysts plainly believe ImageWare Systems is more favorable than SPS Commerce.

Summary

SPS Commerce beats ImageWare Systems on 9 of the 14 factors compared between the two stocks.

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.

About ImageWare Systems

ImageWare Systems, Inc. provides biometrically enabled software-based identity management solutions for biometrics, secure credential, law enforcement, and public safety markets worldwide. Its flagship product is the patented IWS Biometric Engine, a multi-biometric software platform that enables the enrollment and management of unlimited population sizes. The company also offers GoMobile Interactive that enables business, service, and content providers to offer users biometric security for their products, services, and content; IWS PIV (personal identity verification) Management Application that supplies Web-based graphical user interface to server functions; IWS PIV Middleware, which connects card reader and PIV card; IWS Background Server, a software application for biometric identity management functions; IWS Desktop Security, an authentication management platform; and IWS Biometric Quality Assessment and Enhancement, a biometric image enhancement and assessment solution. Its secure credential products include GoVerifyID, a biometric authentication solution; IWS Card Management System to support and manage the issuance of smart cards; IWS EPI Suite, an ID software solution for producing, issuing, and managing credentials and personal identification cards; IWS EPI Builder, which offers various aspects of ID functionality; IWS EPI PrintFarm software for card printing; and IWS PIV Encoder to program the PIV smart cards. In addition, the company provides IWS Law Enforcement, a digital booking, identification, and investigative solution; and LiveScan, Capture, Facial Recognition, Law Enforcement Web, Witness View, and IWS Biometric Engine add-on modules, as well as maintenance and customer support, and software customization and fulfillment services. It serves healthcare, banking, retail/e-commerce, government, and law enforcement and public safety markets. ImageWare Systems, Inc. was founded in 1987 and is headquartered in San Diego, California.

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