Analyzing Paylocity (NASDAQ:PCTY) and i3 Verticals (NASDAQ:IIIV)

i3 Verticals (NASDAQ:IIIV) and Paylocity (NASDAQ:PCTY) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Institutional and Insider Ownership

84.2% of i3 Verticals shares are owned by institutional investors. Comparatively, 94.8% of Paylocity shares are owned by institutional investors. 60.1% of i3 Verticals shares are owned by company insiders. Comparatively, 19.4% of Paylocity shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

i3 Verticals has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, Paylocity has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Earnings and Valuation

This table compares i3 Verticals and Paylocity”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
i3 Verticals	$213.16 million	3.69	$17.87 million	$0.68	35.74
Paylocity	$1.60 billion	4.97	$227.13 million	$3.99	36.56

Paylocity has higher revenue and earnings than i3 Verticals. i3 Verticals is trading at a lower price-to-earnings ratio than Paylocity, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares i3 Verticals and Paylocity’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
i3 Verticals	7.72%	4.66%	3.64%
Paylocity	13.75%	22.07%	5.46%

Analyst Ratings

This is a breakdown of current recommendations and price targets for i3 Verticals and Paylocity, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
i3 Verticals	0	4	4	0	2.50
Paylocity	0	6	14	1	2.76

i3 Verticals presently has a consensus price target of $33.33, suggesting a potential upside of 37.17%. Paylocity has a consensus price target of $204.05, suggesting a potential upside of 39.90%. Given Paylocity’s stronger consensus rating and higher probable upside, analysts plainly believe Paylocity is more favorable than i3 Verticals.

Summary

Paylocity beats i3 Verticals on 13 of the 15 factors compared between the two stocks.

About i3 Verticals

i3 Verticals, Inc. provides integrated payment and software solutions primarily to the public sector and healthcare markets in the United States. It operates in two segments, Software and Services, and Merchant Services. The company offers payment processing services that enables upper and lower court case management, collections, finance and accounting, motor vehicle and carrier registration, e-filing and taxation, license plate inventory, property tax management, utility billing, professional licensing, document workflow, and law enforcement software; assists public schools in completing payment processing functions, including accepting payments for online or at school lunches, and school activities. It also provides software platforms, such as electronic healthcare records and revenue cycle management solutions; insurance adjudication, patient engagement platforms, billing, scheduling, and integrated payments solutions; and workflow software and associated professional services to medical insurance payers. In addition, the company engages in software licenses and subscriptions, transaction-based fees, ongoing software maintenance and support, and other software-related solutions; and payment processing and gateway fees, as well as other related fixed transaction or service fees. Further, it sells equipment, and offers non-software related professional services. The company offers its solutions to clients through direct sales force; distribution partners comprising independent software vendors, independent sales organizations, and value-added resellers. i3 Verticals, Inc. was founded in 2012 and is headquartered in Nashville, Tennessee.

About Paylocity

Paylocity Holding Corporation engages in the provision of cloud-based human capital management and payroll software solutions for workforce in the United States. The company offers payroll software solution for global payroll, expense management, tax services, on demand payment, and garnishment managed services; and time and labor management software for time and attendance, scheduling, and time collection. It also provides human resources (HR) software solutions for employee self-service, compliance, HR edge, data analytics, and workflows and documents, as well as human resource management system; talent management system for recruiting, onboarding, performance, compensation, and learning; and benefits administration software. In addition, the company offers employee experience platform for community, employee voice, recognition and rewards, video, and modern workforce index; HR reporting software; and mobile HR solutions. Further, it provides implementation and training, client, and tax and regulatory services. The company serves for-profit and non-profit organizations across industries, including business services, financial services, healthcare, manufacturing, restaurants, retail, technology, and others. It sells its products through sales representatives. The company was founded in 1997 and is headquartered in Schaumburg, Illinois.