Liberty Tax (TAX) vs. Acacia Research (NASDAQ:ACTG) Critical Survey

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Liberty Tax (NASDAQ: TAX) and Acacia Research (NASDAQ:ACTG) are both small-cap business services companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Institutional and Insider Ownership

48.6% of Liberty Tax shares are held by institutional investors. Comparatively, 61.7% of Acacia Research shares are held by institutional investors. 15.3% of Liberty Tax shares are held by company insiders. Comparatively, 11.0% of Acacia Research shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Liberty Tax and Acacia Research’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Liberty Tax $173.99 million 0.65 $13.01 million $1.15 7.70
Acacia Research $65.40 million 3.33 $22.18 million $2.97 1.45

Acacia Research has lower revenue, but higher earnings than Liberty Tax. Acacia Research is trading at a lower price-to-earnings ratio than Liberty Tax, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Liberty Tax has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Acacia Research has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Dividends

Liberty Tax pays an annual dividend of $0.64 per share and has a dividend yield of 7.2%. Acacia Research does not pay a dividend. Liberty Tax pays out 55.7% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and price targets for Liberty Tax and Acacia Research, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty Tax 0 1 0 0 2.00
Acacia Research 1 0 1 0 2.00

Acacia Research has a consensus target price of $6.50, suggesting a potential upside of 51.16%. Given Acacia Research’s higher possible upside, analysts clearly believe Acacia Research is more favorable than Liberty Tax.

Profitability

This table compares Liberty Tax and Acacia Research’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Liberty Tax N/A N/A N/A
Acacia Research 1.66% 42.95% 39.10%

Summary

Acacia Research beats Liberty Tax on 11 of the 15 factors compared between the two stocks.

Liberty Tax Company Profile

Liberty Tax, Inc., together with its subsidiaries, provides tax preparation services and solutions in the United States and Canada. The company also facilitates refund-based tax settlement financial products, such as refund transfer products, refund-based loans, and personal income tax refund discounting, as well as provides an online digital Do-It-Yourself tax program in the United States. Its customers include taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services. Liberty Tax, Inc. offers its products and services through a network of company-owned offices and franchised locations under the Liberty Tax, Liberty Tax Service, Liberty Income Tax, Liberty Canada, and SiempreTax+ brand names. The company was formerly known as JTH Holding, Inc. and changed its name to Liberty Tax, Inc. in July 2014. Liberty Tax, Inc. was founded in 1996 and is headquartered in Virginia Beach, Virginia.

Acacia Research Company Profile

Acacia Research Corporation, together with its subsidiaries, invests in, licenses, and enforces patented technologies. It assists patent owners with the prosecution and development of their patent portfolios; protection of their patented inventions from unauthorized use; generation of licensing revenue from users of their patented technologies; and enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. The company owns or controls the rights to various patent portfolios, which include U.S. patents and foreign counterparts covering technologies used in a range of industries. It has executed approximately 1,550 license agreements and 193 patent portfolio licensing and enforcement programs. Acacia Research Corporation was founded in 1992 and is headquartered in Newport Beach, California.

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