CDK Global (NASDAQ:CDK) versus Fair Isaac (NASDAQ:FICO) Critical Contrast

CDK Global (NASDAQ:CDK) and Fair Isaac (NYSE:FICO) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.

Profitability

This table compares CDK Global and Fair Isaac’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CDK Global 16.34% -113.53% 15.00%
Fair Isaac 16.57% 63.47% 12.15%

Valuation and Earnings

This table compares CDK Global and Fair Isaac’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CDK Global $2.27 billion 2.71 $380.80 million $3.04 16.66
Fair Isaac $1.03 billion 9.86 $142.41 million $4.34 81.18

CDK Global has higher revenue and earnings than Fair Isaac. CDK Global is trading at a lower price-to-earnings ratio than Fair Isaac, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

CDK Global has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Fair Isaac has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Insider and Institutional Ownership

81.9% of CDK Global shares are owned by institutional investors. Comparatively, 83.9% of Fair Isaac shares are owned by institutional investors. 0.5% of CDK Global shares are owned by insiders. Comparatively, 6.1% of Fair Isaac shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

CDK Global pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Fair Isaac does not pay a dividend. CDK Global pays out 19.7% of its earnings in the form of a dividend. CDK Global has increased its dividend for 4 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for CDK Global and Fair Isaac, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CDK Global 0 2 2 0 2.50
Fair Isaac 0 0 2 0 3.00

CDK Global currently has a consensus price target of $69.67, suggesting a potential upside of 37.52%. Fair Isaac has a consensus price target of $357.50, suggesting a potential upside of 1.48%. Given CDK Global’s higher probable upside, research analysts clearly believe CDK Global is more favorable than Fair Isaac.

Summary

Fair Isaac beats CDK Global on 10 of the 16 factors compared between the two stocks.

CDK Global Company Profile

CDK Global, Inc. provides software and technology solutions for automotive retailers in the United States and internationally. The company operates through Retail Solutions North America, Advertising North America, and CDK International segments. The company offers Dealer Management System (DMS), a portfolio of layered software applications and services for automotive retailers, original equipment manufacturers (OEMs), consumers, and other industry participants manage the acquisition, sale, financing, insuring, parts supply, and repair and maintenance of vehicles. It also provides solutions to retailers and manufacturers of heavy trucks, construction equipment, agricultural equipment, motorcycles, boats, and other marine and recreational vehicles. In addition, the company offers advertising solutions, such as the management of digital advertising spend for automotive retailers, automotive retailer associations, and OEMs; and professional services, custom programming, consulting, implementation, and training solutions, as well as customer support solutions. It serves approximately 28,000 retail locations and OEMs. CDK Global, Inc. is headquartered in Hoffman Estates, Illinois.

Fair Isaac Company Profile

Fair Isaac Corporation develops analytic, software, and data management products and services that enable businesses to automate, enhance, and connect decisions. The company offers analytical solutions, credit scoring, and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, healthcare organizations, and public agencies. It operates through three segments: Applications, Scores, and Decision Management Software. The Applications segment offers pre-configured decision management applications designed for various business problems or processes, such as marketing, account origination, customer management, fraud, collection, and insurance claims management, as well as associated professional services. The Scores segment provides business-to-business scoring solutions and services, including myFICO solutions for consumers that give clients access to analytics to be integrated into their transaction streams and decision-making processes, as well as associated professional services. The Decision Management Software segment offers analytic and decision management software tools, as well as associated professional services. The company offers a portfolio of applications, tools, and services in the cloud to clients through its FICO Analytic Cloud, FICO Decision Management Suite, and FICO Decision Management Platform. Fair Isaac Corporation markets its products and services primarily through its direct sales organization; indirect channels; subsidiary sales organizations; and resellers and independent distributors, as well as online. It operates in the United States, the United Kingdom, and internationally. The company was formerly known as Fair Isaac & Company, Inc. and changed its name to Fair Isaac Corporation in July 1992. Fair Isaac Corporation was founded in 1956 and is headquartered in San Jose, California.

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