Reviewing NIC (EGOV) & Pharma Bio Serv (PBSV)

NIC (NASDAQ:EGOV) and Pharma Bio Serv (OTCMKTS:PBSV) are both small-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Profitability

This table compares NIC and Pharma Bio Serv’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NIC 16.94% 32.21% 20.19%
Pharma Bio Serv -14.93% 0.49% 0.41%

Risk & Volatility

NIC has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, Pharma Bio Serv has a beta of 0.13, suggesting that its stock price is 87% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for NIC and Pharma Bio Serv, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NIC 0 3 0 0 2.00
Pharma Bio Serv 0 0 0 0 N/A

NIC presently has a consensus target price of $16.50, suggesting a potential upside of 22.59%. Given NIC’s higher probable upside, equities analysts clearly believe NIC is more favorable than Pharma Bio Serv.

Dividends

NIC pays an annual dividend of $0.32 per share and has a dividend yield of 2.4%. Pharma Bio Serv pays an annual dividend of $0.08 per share and has a dividend yield of 6.7%. NIC pays out 41.6% of its earnings in the form of a dividend. Pharma Bio Serv pays out -133.3% 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. Pharma Bio Serv is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

87.8% of NIC shares are held by institutional investors. 4.1% of NIC shares are held by insiders. Comparatively, 51.6% of Pharma Bio Serv shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares NIC and Pharma Bio Serv’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NIC $336.51 million 2.66 $51.61 million $0.77 17.48
Pharma Bio Serv $15.58 million 1.76 -$1.41 million ($0.06) -19.83

NIC has higher revenue and earnings than Pharma Bio Serv. Pharma Bio Serv is trading at a lower price-to-earnings ratio than NIC, indicating that it is currently the more affordable of the two stocks.

Summary

NIC beats Pharma Bio Serv on 11 of the 14 factors compared between the two stocks.

About NIC

NIC Inc., together with its subsidiaries, provides digital government services that enable governments to use technology to provide various services to businesses and citizens in the United States. The company's outsourced portal business enters into long-term contracts with state and local governments to design, build, and operate Internet-based and enterprise-wide portals on their behalf. Its portals consist of Websites and applications that enable businesses and citizens to access government information online and secure transactions, such as applying for a permit, retrieving government records, or filing a government-mandated form or report. The company's portal service offerings include motor vehicle driver history record retrieval; vehicle title, lien, and registration; motor vehicle inspections; temporary vehicle tags; driver's license renewal; hunting and fishing licenses; health professional license services; professional license renewal; business registrations and renewals; secretary of state business searches; Uniform Commercial Code (UCC) searches and filings; limited criminal history searches; court services; vital records; income and property tax payments; and payment processing products and services. Its software & services business provides software development and payment processing services to state and local governments, as well as federal agencies. In addition, the company develops and manages the pre-employment screening program for motor carriers using transaction-based business model. Further, it offers consulting, application development, and portal management services to governments. NIC Inc. was founded in 1991 and is based in Olathe, Kansas.

About Pharma Bio Serv

Pharma-Bio Serv, Inc. operates as a compliance and technology transfer services consulting firm with a laboratory testing facility in Puerto Rico, the United States, Europe, and Brazil markets. It provides compliance consulting services to the pharmaceutical, chemical, biotechnology, medical device, cosmetic, food industries, and allied products in Puerto Rico, the United States, Europe, and Brazil. The company's technical consulting services comprise regulatory compliance, validation, technology transfer, engineering, project management, and process support. It also offers microbiological and chemical testing services through its lab; and technical trainings/seminars. The company markets its services through industry trade shows, professional conventions, industry publications, and seminars. Pharma-Bio Serv, Inc. was founded in 1993 and is headquartered in Dorado, Puerto Rico.

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