Quality Systems (QSII) & Science Applications International (SAIC) Critical Analysis

Quality Systems (NASDAQ: QSII) and Science Applications International (NYSE:SAIC) are both it services & consulting – nec companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Valuation & Earnings

This table compares Quality Systems and Science Applications International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Quality Systems $509.62 million 1.73 $18.24 million $0.43 32.16
Science Applications International $4.45 billion 0.75 $148.00 million $3.64 21.50

Science Applications International has higher revenue and earnings than Quality Systems. Science Applications International is trading at a lower price-to-earnings ratio than Quality Systems, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Quality Systems has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Science Applications International has a beta of 1.6, indicating that its stock price is 60% more volatile than the S&P 500.

Dividends

Science Applications International pays an annual dividend of $1.24 per share and has a dividend yield of 1.6%. Quality Systems does not pay a dividend. Science Applications International pays out 34.1% of its earnings in the form of a dividend. Science Applications International has raised its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Quality Systems and Science Applications International, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quality Systems 3 6 1 0 1.80
Science Applications International 0 2 5 0 2.71

Quality Systems currently has a consensus target price of $14.81, indicating a potential upside of 7.10%. Science Applications International has a consensus target price of $81.29, indicating a potential upside of 3.88%. Given Quality Systems’ higher possible upside, research analysts plainly believe Quality Systems is more favorable than Science Applications International.

Institutional and Insider Ownership

72.2% of Quality Systems shares are owned by institutional investors. Comparatively, 64.1% of Science Applications International shares are owned by institutional investors. 17.9% of Quality Systems shares are owned by company insiders. Comparatively, 2.9% of Science Applications International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Quality Systems and Science Applications International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quality Systems 5.12% 14.70% 9.41%
Science Applications International 3.77% 50.26% 8.18%

Summary

Science Applications International beats Quality Systems on 9 of the 17 factors compared between the two stocks.

Quality Systems Company Profile

Quality Systems, Inc. (QSI) primarily, through its NextGen Healthcare subsidiary, provides technology-based solutions and services to the ambulatory care market in the United States. The Company is engaged in developing and marketing software and services that automate certain aspects of practice management (PM) and electronic health records (EHR) for medical and dental practices. The Company operates through three segments: the NextGen Division, the RCM Services Division and the QSI Dental Division. It also provides implementation, training, support and maintenance for software and complementary services, such as revenue cycle management (RCM) and electronic data interchange (EDI). The Company’s clients include single and small practice physicians, networks of practices, such as physician hospital organizations (PHOs), management service organizations (MSOs), accountable care organizations (ACOs), ambulatory care centers, community health centers, and medical and dental schools.

Science Applications International Company Profile

Science Applications International Corporation (SAIC) is a provider of technical, engineering and enterprise information technology (IT) services. The Company provides its services primarily to the United States Government, including the Department of Defense (DoD), the intelligence community and federal civilian agencies. The Company provides engineering, systems integration and information technology offerings for government projects, and offers a range of services with a targeted emphasis on higher-end, differentiated technology services. The Company’s offerings include engineering; technology and equipment platform integration; maintenance of ground and maritime systems; logistics; training and simulation; operation and program support services, and end-to-end services spanning the design, development, integration, deployment, management and operations, sustainment and security of its customers’ entire IT infrastructure.

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