Analyzing EVERTEC (NYSE:EVTC) & LegalZoom.com (NASDAQ:LZ)

EVERTEC (NYSE:EVTC) and LegalZoom.com (NASDAQ:LZ) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitability and analyst recommendations.

Profitability

This table compares EVERTEC and LegalZoom.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
EVERTEC	8.84%	32.08%	9.55%
LegalZoom.com	3.15%	19.47%	7.13%

Dividends

EVERTEC pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. LegalZoom.com pays an annual dividend of $1.44 per share and has a dividend yield of 25.9%. EVERTEC pays out 20.2% of its earnings in the form of a dividend. LegalZoom.com pays out 1,309.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

96.8% of EVERTEC shares are owned by institutional investors. Comparatively, 82.0% of LegalZoom.com shares are owned by institutional investors. 0.8% of EVERTEC shares are owned by insiders. Comparatively, 10.5% of LegalZoom.com shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for EVERTEC and LegalZoom.com, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EVERTEC	1	1	1	0	2.00
LegalZoom.com	2	5	1	0	1.88

EVERTEC presently has a consensus price target of $37.67, indicating a potential upside of 16.40%. LegalZoom.com has a consensus price target of $9.93, indicating a potential upside of 78.25%. Given LegalZoom.com’s higher probable upside, analysts plainly believe LegalZoom.com is more favorable than EVERTEC.

Valuation & Earnings

This table compares EVERTEC and LegalZoom.com’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
EVERTEC	$785.12 million	2.65	$79.72 million	$0.99	32.69
LegalZoom.com	$677.51 million	1.55	$13.95 million	$0.11	50.64

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

Volatility and Risk

EVERTEC has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500. Comparatively, LegalZoom.com has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Summary

EVERTEC beats LegalZoom.com on 11 of the 15 factors compared between the two stocks.

About EVERTEC

EVERTEC, Inc. engages in transaction processing business and financial technology in Latin America and the Caribbean. The company operates through four segments: Payment Services – Puerto Rico & Caribbean; Latin America Payments and Solutions; Merchant Acquiring; and Business Solutions. It provides merchant acquiring services, which enable point of sales and e-commerce merchants to accept and process electronic methods of payment, such as debit, credit, prepaid, and electronic benefit transfer (EBT) cards. In addition, the company offers payment processing services that enable financial institutions and other issuers to manage, support, and facilitate the processing for credit, debit, prepaid, automated teller machines, and EBT card programs; credit and debit card processing, authorization and settlement, and fraud monitoring and control services to debit or credit issuers services. Further, it provides business process management solutions comprising core bank processing, network hosting and management, IT professional, business process outsourcing, item and cash processing, and fulfillment solutions to merchant, fintech, financial institutions, and corporate and government customers. Additionally, the company owns and operates the ATH network, a personal identification number debit networks. It manages a system of electronic payment networks that process approximately six billion transactions. The company sells and distributes its services primarily through direct sales force. It serves financial institutions, merchants, corporations, and government agencies. EVERTEC, Inc. was founded in 1988 and is headquartered in San Juan, Puerto Rico.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company's platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Glendale, California.