Contrasting CDK Global (NASDAQ:CDK) and Datawatch (DWCH)

CDK Global (NASDAQ: CDK) and Datawatch (NASDAQ:DWCH) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, dividends, valuation and profitability.

Analyst Ratings

This is a breakdown of current ratings and price targets for CDK Global and Datawatch, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CDK Global 0 2 2 0 2.50
Datawatch 0 1 2 0 2.67

CDK Global presently has a consensus target price of $76.00, indicating a potential upside of 19.99%. Datawatch has a consensus target price of $14.00, indicating a potential upside of 61.85%. Given Datawatch’s stronger consensus rating and higher possible upside, analysts plainly believe Datawatch is more favorable than CDK Global.

Profitability

This table compares CDK Global and Datawatch’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CDK Global 14.29% -5,261.95% 14.12%
Datawatch -6.89% -3.81% -2.56%

Earnings and Valuation

This table compares CDK Global and Datawatch’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CDK Global $2.22 billion 3.84 $295.60 million $2.26 28.03
Datawatch $36.26 million 2.95 -$3.99 million ($0.22) -39.32

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

Dividends

CDK Global pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. Datawatch does not pay a dividend. CDK Global pays out 26.5% of its earnings in the form of a dividend.

Volatility & Risk

CDK Global has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500. Comparatively, Datawatch has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Insider & Institutional Ownership

85.6% of CDK Global shares are held by institutional investors. Comparatively, 38.4% of Datawatch shares are held by institutional investors. 0.4% of CDK Global shares are held by insiders. Comparatively, 17.7% of Datawatch shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

CDK Global beats Datawatch on 8 of the 14 factors compared between the two stocks.

About CDK Global

CDK Global, Inc. provides integrated information technology and digital marketing solutions. The Company’s segments include Retail Solutions North America, Advertising North America and CDK International. Through its Retail Solutions North America segment, the Company provides technology-based solutions, including automotive Website platforms, that help automotive retailers, original equipment manufacturers (OEMs) and other industry participants manage the acquisition, sale, financing, insuring, parts supply, repair and maintenance of vehicles. Through its Advertising North America segment, the Company provides advertising solutions, including management of digital advertising spend, for OEMs and automotive retailers. As of June 30, 2016, through its CDK International segment, it provided technology-based solutions similar to the retail solutions provided in its Retail Solutions North America segment in approximately 100 countries outside of the United States and Canada.

About Datawatch

Datawatch Corporation is engaged in the design, development, marketing, distribution and support of business computer software primarily for the self-service data preparation and visual data discovery markets. The Company also provides services, including implementation and support of its software products, as well as training on their use and administration. The Company’s product family includes Datawatch Monarch, Datawatch Panopticon and Datawatch Report Mining Server (RMS). The Company offers its enterprise products through perpetual licenses and subscription pricing models. The Company also offers educational services for customers and partners implementing and learning about the platform, maintenance and support, and professional services to provide in-depth technical assistance for software implementations. The Company offers an array of live and virtual classroom instruction, including private onsite classes.

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