SPS Commerce (NASDAQ:SPSC) and Oracle (NYSE:ORCL) are both business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.
Risk and Volatility
SPS Commerce has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, Oracle has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent ratings for SPS Commerce and Oracle, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| SPS Commerce | 0 | 0 | 6 | 1 | 3.14 |
| Oracle | 3 | 17 | 8 | 0 | 2.18 |
SPS Commerce currently has a consensus price target of $60.58, indicating a potential upside of 7.84%. Oracle has a consensus price target of $56.41, indicating a potential upside of 3.49%. Given SPS Commerce’s stronger consensus rating and higher possible upside, analysts clearly believe SPS Commerce is more favorable than Oracle.
Valuation and Earnings
This table compares SPS Commerce and Oracle’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| SPS Commerce | $248.24 million | 7.88 | $23.87 million | $0.61 | 92.10 |
| Oracle | $39.51 billion | 4.53 | $11.08 billion | $3.16 | 17.25 |
Oracle has higher revenue and earnings than SPS Commerce. Oracle is trading at a lower price-to-earnings ratio than SPS Commerce, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares SPS Commerce and Oracle’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| SPS Commerce | 11.67% | 9.80% | 7.97% |
| Oracle | 27.71% | 48.85% | 10.67% |
Insider and Institutional Ownership
96.7% of SPS Commerce shares are owned by institutional investors. Comparatively, 51.1% of Oracle shares are owned by institutional investors. 3.3% of SPS Commerce shares are owned by company insiders. Comparatively, 36.6% of Oracle shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
Oracle beats SPS Commerce on 9 of the 15 factors compared between the two stocks.
SPS Commerce Company Profile
SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It offers solutions through the SPS Commerce platform, a cloud-based platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill orders, administer sell-through performance, and source new items. The company offers Trading Partner Community solution, which enables retailers, grocers, and distributors to introduce changes to their supply chain requirements to their trading partner community, and onboard new vendors to receive their first orders; Trading Partner Fulfillment solution that provides fulfillment automation and replaces or augments an organization’s existing staff and trading partner electronic communication infrastructure; and Trading Partner Assortment solution to manage individual attributes associated with each item a retailer or supplier sells. It also provides Trading Partner Analytics solution, which consists of data analytics applications that allow customers to enhance their visibility and analysis of their supply chains; Trading Partner Sourcing solutions that enables retailers to source providers of new items, suppliers to connect with new retailers, and retailing community; and Other Trading Partner Solutions, such as barcode labeling, planogram services, and scan and pack application that helps trading partners process information to streamline the picking and packaging process. The company sells its solutions through retailer, supplier, and logistic sales representatives to small- to mid-sized suppliers, as well as retailers, distributors, third-party logistics providers, and other trading partners. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.
Oracle Company Profile
Oracle Corporation develops, manufactures, markets, sells, hosts, and supports application, platform, and infrastructure solutions for information technology (IT) environments worldwide. The company provides services in three primary layers of the cloud: Software as a Service, Platform as a Service, and Infrastructure as a Service. It offers human capital and talent management, enterprise resource planning, customer experience and relationship management, procurement, supply chain management, project portfolio management, business analytics and enterprise performance management, and industry-specific application software, as well as financial management and governance, and risk and compliance applications. The company also licenses its Oracle Database for storage, retrieval, and manipulation of data; and Oracle Fusion Middleware software to build, deploy, secure, access, extend, and integrate business applications, as well as automate business processes. In addition, it provides a range of development tools, identity management, and business analytics software solutions for mobile computing development to address the development needs of businesses; Java, a software development language; and big data solutions. Further, the company provides Oracle Engineered Systems, servers, storage, industry-specific hardware, and hardware support products, as well as operating systems, virtualization, management, and other hardware-related software. Additionally, it provides consulting services, including IT strategy alignment, enterprise architecture planning and design, initial software implementation and integration, application development and integration, security assessments, and ongoing software enhancements and upgrade services; and customer support and education services. The company serves businesses, government agencies, educational institutions, and resellers. Oracle Corporation was founded in 1977 and is headquartered in Redwood City, California.
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