Digimarc (NASDAQ: SYKE) and Sykes Enterprises (NASDAQ:SYKE) are both small-cap industrial products companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Profitability

This table compares Digimarc and Sykes Enterprises’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digimarc -116.98% -37.68% -35.22%
Sykes Enterprises 1.39% 10.28% 6.68%

Earnings and Valuation

This table compares Digimarc and Sykes Enterprises’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digimarc $25.21 million 13.50 -$25.77 million ($2.44) -11.74
Sykes Enterprises $1.59 billion 0.79 $32.21 million $2.00 14.60

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

Institutional & Insider Ownership

51.8% of Digimarc shares are held by institutional investors. Comparatively, 86.9% of Sykes Enterprises shares are held by institutional investors. 6.1% of Digimarc shares are held by company insiders. Comparatively, 2.9% of Sykes Enterprises shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Digimarc and Sykes Enterprises, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digimarc 0 0 4 0 3.00
Sykes Enterprises 0 2 1 0 2.33

Digimarc currently has a consensus price target of $42.75, suggesting a potential upside of 49.21%. Sykes Enterprises has a consensus price target of $32.50, suggesting a potential upside of 11.34%. Given Digimarc’s stronger consensus rating and higher probable upside, analysts plainly believe Digimarc is more favorable than Sykes Enterprises.

Volatility & Risk

Digimarc has a beta of -1.04, meaning that its share price is 204% less volatile than the S&P 500. Comparatively, Sykes Enterprises has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Summary

Sykes Enterprises beats Digimarc on 9 of the 14 factors compared between the two stocks.

About Digimarc

Digimarc Corporation provides media identification and management solutions to commercial entities and government customers in the United States and internationally. The company offers Digimarc Intuitive Computing Platform, a comprehensive set of technologies for identifying, discovering, and interacting with digitally-enhanced media, which includes Digimarc Barcode, a method for imperceptibly enhancing packaging, print, images, thermal labels, audio, and other objects with data that is detected by enabled devices, such as smart phones, computers, barcode scanners, and machine-vision equipment. It also provides Digimarc Discover software that enables an ecosystem of connected devices to identify content or materials and deliver information. The company's solutions identify, track, manage, and protect content; and enable new consumer applications to access networks and information from personal computers and mobile devices. Its solutions are used in various media identification and management products and solutions, such as counterfeiting and piracy deterrence; online e-publication piracy protection; content identification and media management; authentication and monitoring; retail point of sale transaction processing; linking to networks and providing access to information; and enhanced services in support of mobile commerce. The company provides its solutions directly and through its business partners. Digimarc Corporation was founded in 2008 and is based in Beaverton, Oregon.

About Sykes Enterprises

Sykes Enterprises, Incorporated, together with its subsidiaries, provides multichannel demand generation and global customer engagement services. Its customer care services include handling billing inquiries and claims, activating customer accounts, resolving complaints, cross-selling/up-selling, and prequalifying and warranty management, as well as providing health information and dispatching roadside assistance. The company's technical support services comprise support around complex networks, hardware and software, communications equipment, Internet access technology, and Internet portal usage. It also provides customer acquisition services, which focuses around digital marketing, demand generation, and in-bound sales conversion, as well as inbound and outbound up-selling its clients' products and services. It also provides technical staffing services to outsourced corporate help desk services; and fulfillment services, such as order and payment processing, inventory control, product delivery, and product returns handling. The company offers its services through phone, e-mail, social media, text messaging, chat, and digital self-service support. Sykes Enterprises, Incorporated provides its services to corporations, medium-sized businesses, and public institutions in the communications, financial services, technology, transportation and leisure, healthcare, retail, and other industries. It operates in the United States, Canada, Latin America, Australia, the Asia Pacific Rim, Europe, the Middle East, and Africa. Sykes Enterprises, Incorporated was founded in 1977 and is headquartered in Tampa, Florida.

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