Evertec (NYSE:EVTC) and FRONTEO (NASDAQ:FTEO) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.

Valuation & Earnings

This table compares Evertec and FRONTEO’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Evertec $453.87 million 5.22 $86.27 million $1.70 19.38
FRONTEO $101.88 million 0.90 $1.96 million N/A N/A

Evertec has higher revenue and earnings than FRONTEO.

Dividends

Evertec pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. FRONTEO does not pay a dividend. Evertec pays out 11.8% of its earnings in the form of a dividend.

Profitability

This table compares Evertec and FRONTEO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Evertec 20.55% 60.49% 14.03%
FRONTEO -4.66% -12.78% -4.32%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Evertec and FRONTEO, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Evertec 0 0 3 0 3.00
FRONTEO 0 0 0 0 N/A

Evertec currently has a consensus price target of $33.67, indicating a potential upside of 2.18%. Given Evertec’s higher possible upside, equities research analysts clearly believe Evertec is more favorable than FRONTEO.

Institutional & Insider Ownership

79.5% of Evertec shares are held by institutional investors. 0.6% of Evertec shares are held 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.

Volatility and Risk

Evertec has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, FRONTEO has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500.

Summary

Evertec beats FRONTEO on 11 of the 13 factors compared between the two stocks.

Evertec Company Profile

EVERTEC, Inc. engage in transaction processing business serving financial institutions, merchants, corporations, and government agencies in Latin America and the Caribbean. The company operates in four segments: Payment Services – Puerto Rico & Caribbean; Payment Services – Latin America; Merchant Acquiring; and Business Solutions. It provides merchant acquiring services, which enable point of sales and e-commerce merchants to accept and process electronic methods of payment, such as debit, credit, prepaid, and electronic benefit transfer (EBT) cards. The company also offers payment processing services that enable financial institutions and other issuers to manage, support, and facilitate the processing for credit, debit, prepaid, automated teller machines and EBT card programs; credit and debit card processing, authorization and settlement, and fraud monitoring and control services to debit or credit issuers; and EBT services. In addition, it provides business process management solutions comprising core bank processing, network hosting and management, IT consulting services, business process outsourcing, item and cash processing, and fulfillment solutions to financial institutions, and corporate and government customers. The company manages a system of electronic payment networks that process approximately two billion transactions. It sells and distributes its services primarily through a proprietary direct sales force. The company was formerly known as Carib Latam Holdings, Inc. EVERTEC, Inc. was founded in 1988 and is based in San Juan, Puerto Rico.

FRONTEO Company Profile

FRONTEO, Inc. provides Asian-language eDiscovery solutions and services primarily in the United States, Europe, and Asia. The company operates in two segments, Legal Tech Services and Artificial Intelligence (AI) Solutions Services. It has eDiscovery and forensic information documented in Japanese, Korean, Chinese, and English. The company assists clients involved in cross-border litigation, administrative proceedings, and internal investigations, including those related to antitrust investigations, intellectual property litigation, the Foreign Corrupt Practices Act, and product liability investigations. It also provides Lit i View, an online eDiscovery software, which handles Asian-language characters, encoding schemes, and native file systems; and Intelligence Cloud solution to maintain client data during and after a particular litigation or investigation, and data and documents in a relational database of its clients' data and documents. In addition, the company offers electronic data forensic investigation solutions and services that enables the preservation, analysis, processing, and production of electronically stored information in connection with fraud and corporate information leakage; forensic tools; and Lit i View XAMINER, a digital forensic software, and other related hardware and software products. Further, it helps to create document management procedures; conduct corporate risk audits; and comply with legal requirements to provide information to stakeholders. Additionally, the company provides AI solutions in the fields of business intelligence, healthcare, and digital communications. It serves enterprises, government agencies, law firms, and other organizations under the FRONTEO, KIBIT, and Landscaping brands. The company was formerly known as UBIC, Inc. and changed its name to FRONTEO, Inc. in July 2016. FRONTEO, Inc. was founded in 2003 and is headquartered in Tokyo, Japan.

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