Analyzing American Software (AMSWA) and HubSpot (HUBS)

American Software (NASDAQ: AMSWA) and HubSpot (NYSE:HUBS) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Profitability

This table compares American Software and HubSpot’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Software 16.73% 17.27% 12.22%
HubSpot -12.16% -21.93% -7.61%

Volatility and Risk

American Software has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, HubSpot has a beta of 2.3, suggesting that its share price is 130% more volatile than the S&P 500.

Earnings and Valuation

This table compares American Software and HubSpot’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Software $106.29 million 3.65 $14.62 million $0.59 21.81
HubSpot $270.97 million 14.03 -$45.56 million ($1.16) -87.67

American Software has higher earnings, but lower revenue than HubSpot. HubSpot is trading at a lower price-to-earnings ratio than American Software, indicating that it is currently the more affordable of the two stocks.

Dividends

American Software pays an annual dividend of $0.44 per share and has a dividend yield of 3.4%. HubSpot does not pay a dividend. American Software pays out 74.6% of its earnings in the form of a dividend.

Insider and Institutional Ownership

74.9% of American Software shares are owned by institutional investors. Comparatively, 93.2% of HubSpot shares are owned by institutional investors. 13.9% of American Software shares are owned by company insiders. Comparatively, 12.1% of HubSpot shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for American Software and HubSpot, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Software 0 0 1 0 3.00
HubSpot 0 2 14 0 2.88

American Software presently has a consensus price target of $14.00, indicating a potential upside of 8.78%. HubSpot has a consensus price target of $84.21, indicating a potential downside of 17.19%. Given American Software’s stronger consensus rating and higher probable upside, equities analysts plainly believe American Software is more favorable than HubSpot.

Summary

American Software beats HubSpot on 10 of the 16 factors compared between the two stocks.

About American Software

American Software, Inc. (American Software) develops, markets and supports a portfolio of software and services that delivers enterprise management, supply chain and retail planning solutions to the marketplace. The Company operates through three business segments: Supply Chain Management (SCM), Enterprise Resource Planning (ERP) and Information Technology (IT) Consulting. The SCM segment consists of Logility, Inc. and its subsidiary, Demand Management, Inc. (DMI), both of which provide supply chain and retail planning solutions to trading partners. The ERP segment consist of American Software ERP, which provides business software for manufacturers and distributors, and New Generation Computing, Inc. (NGC), which provides industry-specific business software to both retailers and manufacturers in the apparel, footwear, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, Inc., an IT staffing and consulting services firm.

About HubSpot

HubSpot, Inc. (HubSpot) provides a cloud-based marketing and sales software platform. The Company’s software platform features integrated applications to help businesses attract visitors to their Websites, convert visitors into leads, close leads into customers and delight customers so that they become promoters of those businesses. These integrated applications include social media, search engine optimization, blogging, Website content management, marketing automation, e-mail, sales productivity, customer relationship management (CRM), analytics and reporting. The Company’s products include HubSpot Marketing, HubSpot CRM and HubSpot Sales. The Company offers Professional Services and support. It offers professional services to educate and train customers on how to leverage its software platform and inbound marketing methodology to transform how their business attracts, engages and delights customers.

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