SPS Commerce (NASDAQ:SPSC) and CorVel (NASDAQ:CRVL) Financial Analysis

CorVel (NASDAQ:CRVL) and SPS Commerce (NASDAQ:SPSC) are both mid-cap business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares CorVel and SPS Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CorVel	11.23%	30.15%	17.62%
SPS Commerce	12.42%	12.73%	10.62%

Risk & Volatility

CorVel has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500.

Earnings and Valuation

This table compares CorVel and SPS Commerce”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CorVel	$895.59 million	2.97	$95.17 million	$2.04	25.46
SPS Commerce	$751.51 million	3.13	$93.34 million	$2.45	25.70

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

Insider and Institutional Ownership

51.4% of CorVel shares are held by institutional investors. Comparatively, 99.0% of SPS Commerce shares are held by institutional investors. 44.6% of CorVel shares are held by company insiders. Comparatively, 1.0% of SPS Commerce shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for CorVel and SPS Commerce, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CorVel	0	1	0	0	2.00
SPS Commerce	1	7	2	1	2.27

SPS Commerce has a consensus target price of $87.40, suggesting a potential upside of 38.82%. Given SPS Commerce’s stronger consensus rating and higher possible upside, analysts clearly believe SPS Commerce is more favorable than CorVel.

Summary

SPS Commerce beats CorVel on 9 of the 15 factors compared between the two stocks.

About CorVel

CorVel Corporation provides workers’ compensation, auto, liability, and health solutions. It applies technology, including artificial intelligence, machine learning, and natural language processing to enhance the managing of episodes of care and the related health care costs. The company also offers network solutions services, including automated medical fee auditing, preferred provider management and reimbursement, retrospective utilization review, facility claim review, professional review, pharmacy, directed care, clearinghouse, independent medical examination, and inpatient medical bill review services, as well as Medicare solutions. In addition, it provides a range of patient management services, such as claims management, case management, 24/7 nurse triage, utilization management, vocational rehabilitation, and life care planning, as well as processing of claims for self-insured payors with respect to property and casualty insurance. The company offers solutions to employers, third party administrators, insurance companies, and government agencies to assist them in managing the medical costs and monitoring the quality of care associated with healthcare claims. CorVel Corporation was incorporated in 1987 and is based in Fort Worth, Texas.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions in the United States and internationally. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, grocers, suppliers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment, an electronic data interchange solution that scales as a business grows, where companies use a single system to manage orders and logistics from various sales channels, including wholesale, eCommerce, and marketplaces; and Analytics product that enables organizations to enhance visibility into how products are selling through a single connection across various sales channels, including wholesale, eCommerce, and marketplaces, as well as enhances access and usage of sales and inventory data through a combination of analytics applications, network of connections, and industry-leading expertise. In addition, it offers various complimentary products, such as assortment product, which simplifies the communication of robust, accurate item data by automatically translating item attributes, and hierarchies; and community product that allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through change management and onboarding programs. 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.