Altair Engineering (NASDAQ:ALTR) and American Software (NASDAQ:AMSWA) are both construction companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.
Volatility and Risk
Altair Engineering has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, American Software has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for Altair Engineering and American Software, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Altair Engineering | 1 | 4 | 1 | 0 | 2.00 |
| American Software | 0 | 1 | 1 | 0 | 2.50 |
Altair Engineering currently has a consensus target price of $35.14, indicating a potential downside of 6.52%. American Software has a consensus target price of $14.52, indicating a potential downside of 2.32%. Given American Software’s stronger consensus rating and higher possible upside, analysts clearly believe American Software is more favorable than Altair Engineering.
Institutional and Insider Ownership
69.9% of Altair Engineering shares are held by institutional investors. Comparatively, 76.6% of American Software shares are held by institutional investors. 29.3% of Altair Engineering shares are held by insiders. Comparatively, 11.2% of American Software shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Altair Engineering and American Software’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Altair Engineering | $396.38 million | 6.81 | $13.72 million | $0.37 | 101.59 |
| American Software | $108.71 million | 4.37 | $6.80 million | $0.28 | 53.07 |
Altair Engineering has higher revenue and earnings than American Software. American Software is trading at a lower price-to-earnings ratio than Altair Engineering, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Altair Engineering and American Software’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Altair Engineering | -3.85% | 4.40% | 2.32% |
| American Software | 6.51% | 7.76% | 5.49% |
Summary
Altair Engineering beats American Software on 7 of the 13 factors compared between the two stocks.
Altair Engineering Company Profile
Altair Engineering Inc., together with its subsidiaries, provides software and cloud solutions worldwide. The company operates through two segments, Software and Client Engineering Services. Its integrated suite of multi-disciplinary computer aided engineering software optimizes design performance across various disciplines, including structures, motion, fluids, thermal management, electromagnetics, system modeling and embedded systems. The company offers software products in the areas of design, modeling, visualization; physics simulation; data intelligence; cloud computing; and Internet of Things for decision making in product design and development, manufacturing, energy management and exploration, financial services, health care, and retail operations. It also provides consulting, training, and implementation services; and client engineering services to support customers with ongoing product design and development services. The company was founded in 1985 and is headquartered in Troy, Michigan.
American Software Company Profile
American Software, Inc. develops, markets, and supports a portfolio of software and services worldwide. It operates in three segments: Supply Chain Management (SCM), Information Technology (IT) Consulting, and Other. The SCM segment provides supply chain management and retail planning solutions, including sales and operations planning, demand and inventory optimization, manufacturing planning and scheduling, supply optimization, retail allocation and merchandise planning, and transportation optimization solutions to streamline and optimize the forecasting, inventory, production scheduling, production, supply, allocation, distribution, and management of products between trading partners. This segment also offers cloud solutions for supply chain management, product lifecycle management, vendor quality, and vendor compliance and corporate social responsibility for brand retailers and manufacturers; and analytics and business intelligence solutions for the supply chain market. The IT Consulting segment offers IT staffing and consulting services, such as professional services/product management/project management, staff augmentation, and social media and analytic marketing, as well as cloud, collaboration, network, and security services for software enhancement, documentation, update, customer education, consulting, systems integration, maintenance, and other support services. The Other segment provides purchasing and materials management, customer order processing, financial, e-commerce, and traditional manufacturing solutions. The company markets its products through direct and indirect sales channels to retail, apparel, footwear, consumer packaged goods, chemicals, oil and gas, life sciences, telecommunications, consumer electronics, industrial products, and other manufacturing industries. American Software, Inc. was founded in 1970 and is headquartered in Atlanta, Georgia.
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