Acacia Research Corporation (NASDAQ: ACTG) and Nelnet (NYSE:NNI) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Valuation & Earnings

This table compares Acacia Research Corporation and Nelnet’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Acacia Research Corporation $111.94 million 1.94 $13.80 million ($0.57) -7.54
Nelnet $861.56 million 1.76 $185.19 million $6.16 8.20

Nelnet has higher revenue and earnings than Acacia Research Corporation. Acacia Research Corporation is trading at a lower price-to-earnings ratio than Nelnet, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Acacia Research Corporation has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Nelnet has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.

Profitability

This table compares Acacia Research Corporation and Nelnet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acacia Research Corporation -25.64% -1.06% -0.95%
Nelnet 20.19% 9.65% 0.75%

Dividends

Nelnet pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Acacia Research Corporation does not pay a dividend. Nelnet pays out 9.1% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Acacia Research Corporation and Nelnet, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acacia Research Corporation 1 0 1 0 2.00
Nelnet 0 2 0 0 2.00

Acacia Research Corporation currently has a consensus target price of $6.50, indicating a potential upside of 51.16%. Nelnet has a consensus target price of $50.00, indicating a potential downside of 1.05%. Given Acacia Research Corporation’s higher possible upside, research analysts plainly believe Acacia Research Corporation is more favorable than Nelnet.

Insider & Institutional Ownership

70.9% of Acacia Research Corporation shares are owned by institutional investors. Comparatively, 40.9% of Nelnet shares are owned by institutional investors. 2.8% of Acacia Research Corporation shares are owned by company insiders. Comparatively, 45.4% of Nelnet shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Nelnet beats Acacia Research Corporation on 8 of the 14 factors compared between the two stocks.

Acacia Research Corporation Company Profile

Acacia Research Corporation, through its subsidiaries, invests in, licenses and enforces patented technologies. The Company’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. The Company’s operating subsidiaries assist patent owners with the prosecution and development of their patent portfolios, the protection of their patented inventions from unauthorized use, the generation of licensing revenue from users of their patented technologies and, where necessary, with the enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. The Company’s operating subsidiaries own or control the rights to multiple patent portfolios, which include the United States patents and certain foreign counterparts, covering technologies used in a range of industries.

Nelnet Company Profile

Nelnet, Inc. focuses on delivering education-related products and services and student loan asset management. The Company is engaged in student loan servicing, tuition payment processing and school information systems, and communications. The Company’s segments include Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce, Communications, Asset Generation and Management, and Corporate and Other Activities. The Company earns fee-based revenue through its Loan Systems and Servicing, Tuition Payment Processing, and Communications operating segments. In addition, the Company earns interest income on its student loan portfolio in its Asset Generation and Management operating segment. Corporate and Other Activities include real estate and other investments. The Company, through Allo Communications LLC, is engaged in the sale of advanced telecommunication services, including Internet, broadband, telephone, and television services.

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