Critical Review: Fiserv (FISV) & Tucows (TCX)

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Fiserv (NASDAQ: TCX) and Tucows (NASDAQ:TCX) are both business services companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.

Profitability

This table compares Fiserv and Tucows’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fiserv 25.14% 44.25% 11.80%
Tucows 6.24% 26.59% 4.70%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Fiserv and Tucows, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fiserv 1 10 4 0 2.20
Tucows 0 0 0 0 N/A

Fiserv currently has a consensus target price of $75.32, suggesting a potential downside of 5.51%. Given Fiserv’s higher probable upside, research analysts plainly believe Fiserv is more favorable than Tucows.

Risk & Volatility

Fiserv has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Tucows has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Valuation and Earnings

This table compares Fiserv and Tucows’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fiserv $5.70 billion 5.67 $1.25 billion $2.56 31.14
Tucows $329.42 million 1.84 $22.32 million N/A N/A

Fiserv has higher revenue and earnings than Tucows.

Institutional and Insider Ownership

88.4% of Fiserv shares are owned by institutional investors. Comparatively, 54.8% of Tucows shares are owned by institutional investors. 1.7% of Fiserv shares are owned by insiders. Comparatively, 11.8% of Tucows shares are owned by 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.

Summary

Fiserv beats Tucows on 9 of the 12 factors compared between the two stocks.

Fiserv Company Profile

Fiserv, Inc., together with its subsidiaries, provides financial services technology worldwide. The company's Payments and Industry Products segment provides electronic bill payment and presentment services; mobile banking software and services; account-to-account transfers; person-to-person payment services; debit and credit card processing and services; payments infrastructure services; and other electronic payments software and services. This segment also offers card and print personalization services; investment account processing services for separately managed accounts; and fraud and risk management products and services. Its Financial Institution Services segment provides account processing services, source capture services, loan origination and servicing products, cash management and consulting services, and other products and services that support various types of financial transactions. This segment also offers a range of services, such as customization, business process outsourcing, training, consulting, and implementation services; and ACH and treasury management, and case management and resolution to the financial services industry. The company also provides document and payment card production and distribution, check processing and imaging, and lending products and services; and bank payment and liquidity management solutions, as well as Internet based mortgage software and mortgage lending technology solutions. It serves banks, savings banks, credit unions, investment management firms, leasing and finance companies, billers, retailers, merchants, and building societies. The company was founded in 1984 and is headquartered in Brookfield, Wisconsin.

Tucows Company Profile

Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in Canada, the United States, and Germany. It operates in two segments, Network Access Services and Domain Services. The Network Access Services segment offers mobile and fixed high-speed Internet access services, and Internet hosting and network consulting services. The Domain Services segment provides OpenSRS domain service that offers services related to the registration, renewal, transfer, and management of domain names; OpenSRS value-added services, such as hosted email service that provides email delivery and Webmail access to various mailboxes; Internet security services; publishing tools; SSL certificates; and billing services. This segment also offers Platypus billing software, which provides billing, provisioning, and customer care software solutions to Internet service providers (ISPs); and Internet domain name registration and email services to individuals and small businesses. This segment offers its services under the OpenSRS, eNom, and Hover brands. Tucows Inc. provides its services through an Internet-based distribution network of ISPs, Web hosting companies, and other providers of Internet services to end-users. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was founded in 1992 and is headquartered in Toronto, Canada.

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