First Data (NYSE: TSS) and Total System Services (NYSE:TSS) are both large-cap business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, profitability, analyst recommendations, earnings, dividends and risk.

Dividends

Total System Services pays an annual dividend of $0.52 per share and has a dividend yield of 0.5%. First Data does not pay a dividend. Total System Services pays out 16.1% of its earnings in the form of a dividend.

Volatility & Risk

First Data has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, Total System Services has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Institutional and Insider Ownership

51.2% of First Data shares are owned by institutional investors. Comparatively, 77.0% of Total System Services shares are owned by institutional investors. 5.6% of First Data shares are owned by insiders. Comparatively, 2.4% of Total System Services shares are owned 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.

Profitability

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

Net Margins Return on Equity Return on Assets
First Data 15.39% 21.88% 2.87%
Total System Services 14.39% 29.26% 10.09%

Analyst Recommendations

This is a summary of current ratings and price targets for First Data and Total System Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Data 0 2 24 0 2.92
Total System Services 1 9 15 0 2.56

First Data presently has a consensus target price of $25.04, indicating a potential downside of 0.28%. Total System Services has a consensus target price of $89.00, indicating a potential downside of 7.88%. Given First Data’s stronger consensus rating and higher probable upside, equities research analysts plainly believe First Data is more favorable than Total System Services.

Earnings & Valuation

This table compares First Data and Total System Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Data $12.05 billion 1.95 $1.47 billion $1.28 19.62
Total System Services $4.93 billion 3.58 $586.18 million $3.22 30.00

First Data has higher revenue and earnings than Total System Services. First Data 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.

Summary

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

First Data Company Profile

First Data Corporation provides electronic commerce solutions for merchants, financial institutions, and card issuers worldwide. It operates through three segments: Global Business Solutions (GBS), Global Financial Solutions (GFS), and Network & Security Solutions (NSS). The GBS segment offers retail point-of-sale merchant acquiring and e-commerce services; and mobile payment services, as well as its cloud-based Clover point-of-sale operating system, which includes a marketplace for proprietary and third-party business applications. The GFS segment provides technology solutions for bank and non-bank issuers comprising credit, retail private label, commercial card, and loan processing; licensed financial software systems, such as VisionPLUS processing application; and account services, including card personalization and embossing, customer communications, remittance processing, professional services, and customer servicing consisting of call center solutions and back office processing. The NSS segment offers a range of value-added solutions that include electronic funds transfer network solutions comprising debit card processing solutions; stored value network solutions; and gift, and security and fraud solutions. This segment also supports online and mobile banking, as well as its business supporting mobile wallets. The company was founded in 1989 and is headquartered in Atlanta, Georgia.

Total System Services Company Profile

Total System Services, Inc. provides payment processing, merchant, and related payment services to financial and nonfinancial institutions worldwide. The company operates through three segments: Merchant Solutions, Issuer Solutions, and Netspend. It offers general purpose reloadable prepaid and payroll cards, demand deposit accounts, and other financial service solutions to the underbanked and other consumers and businesses. The company also provides third party processing and related services for credit card issuers, merchant acquirers, independent sales organizations, and financial institutions; and issuer processing services, as well as operates as a prepaid program manager. Total System Services, Inc. was founded in 1982 and is headquartered in Columbus, Georgia.

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