Proofpoint (NASDAQ: PFPT) and Total System Services (NYSE:TSS) are both it services & consulting – nec companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Insider and Institutional Ownership

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74.2% of Total System Services shares are held by institutional investors. 6.0% of Proofpoint shares are held by insiders. Comparatively, 2.6% of Total System Services shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Proofpoint and Total System Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Proofpoint $515.29 million 10.89 -$84.34 million ($1.96) -56.66
Total System Services $4.93 billion 3.23 $586.18 million $3.16 27.71

Total System Services has higher revenue and earnings than Proofpoint. Proofpoint is trading at a lower price-to-earnings ratio than Total System Services, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Proofpoint has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Total System Services has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Profitability

This table compares Proofpoint and Total System Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Proofpoint -16.37% -54.09% -5.19%
Total System Services 11.90% 26.50% 9.48%

Dividends

Total System Services pays an annual dividend of $0.52 per share and has a dividend yield of 0.6%. Proofpoint does not pay a dividend. Total System Services pays out 16.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations for Proofpoint and Total System Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Proofpoint 1 3 21 0 2.80
Total System Services 1 11 16 0 2.54

Proofpoint presently has a consensus price target of $108.57, indicating a potential downside of 2.24%. Total System Services has a consensus price target of $81.64, indicating a potential downside of 6.77%. Given Proofpoint’s stronger consensus rating and higher probable upside, analysts clearly believe Proofpoint is more favorable than Total System Services.

Summary

Total System Services beats Proofpoint on 9 of the 16 factors compared between the two stocks.

About Proofpoint

Proofpoint, Inc. is a security-as-a-service provider that enables large and mid-sized organizations to defend, protect, archive and govern their sensitive data. The Company’s security-as-a-service platform consists of an integrated suite of on-demand data protection solutions, including threat protection, incident response, regulatory compliance, archiving, governance, eDiscovery and secure communication. The Company’s solutions are built on a cloud-based platform. The Company provides a multi-tiered security-as-a-service platform, including solutions, platform technologies and infrastructure. Its product families include Email Security, Proofpoint Advanced Threat Protection, Proofpoint Information Protection and Archiving, and Proofpoint Digital Risk Protection. The Company’s platform services include Threat detection, Threat intel extraction, Nexus threat graph, Real-time detection, Information classification and Intelligent policy.

About Total System Services

Total System Services, Inc. (TSYS) is a payment solutions provider that provides payment processing services, merchant services and related payment services to financial and non-financial institutions. The Company’s segments include North America Services, Merchant Services, NetSpend and International Services. In addition, it provides general purpose reloadable (GPR) prepaid and payroll cards, and alternative financial service solutions to the underbanked and other consumers. The Company’s Merchant Services segment provides third party processing services to merchant acquirers and Independent Sales Organizations (ISOs) and financial institutions. The Company’s NetSpend segment is engaged in the provision and sale of prepaid access devices, such as its GPR prepaid debit cards. The Company’s services and solutions include Issuing Services, Acquiring Services, Prepaid Solutions and Merchant Solutions.

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