Head-To-Head Survey: Constellation Software (OTCMKTS:CNSWF) & Karooooo (NASDAQ:KARO)

Constellation Software (OTCMKTS:CNSWF) and Karooooo (NASDAQ:KARO) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Constellation Software and Karooooo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Constellation Software	0	1	6	1	3.00
Karooooo	0	2	5	0	2.71

Karooooo has a consensus target price of $73.50, indicating a potential upside of 6.97%. Given Karooooo’s higher possible upside, analysts plainly believe Karooooo is more favorable than Constellation Software.

Earnings and Valuation

This table compares Constellation Software and Karooooo”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Constellation Software	$11.62 billion	3.69	$512.00 million	$45.33	44.65
Karooooo	$314.11 million	6.76	$56.95 million	$1.97	34.88

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

Volatility & Risk

Constellation Software has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, Karooooo has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Profitability

This table compares Constellation Software and Karooooo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Constellation Software	7.60%	47.37%	12.80%
Karooooo	17.74%	32.03%	19.06%

Dividends

Constellation Software pays an annual dividend of $4.00 per share and has a dividend yield of 0.2%. Karooooo pays an annual dividend of $1.50 per share and has a dividend yield of 2.2%. Constellation Software pays out 8.8% of its earnings in the form of a dividend. Karooooo pays out 76.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Karooooo has raised its dividend for 2 consecutive years. Karooooo is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Constellation Software beats Karooooo on 10 of the 16 factors compared between the two stocks.

About Constellation Software

Constellation Software Inc., together with its subsidiaries, acquires, builds, and manages vertical market software businesses in Canada, the United States, Europe, and internationally. It provides mission critical software solutions for public and private sector markets. The company is also involved in the software licensing; and sale of third-party hardware. In addition, it offers professional, and maintenance and other recurring services. Constellation Software Inc. was incorporated in 1995 and is headquartered in Toronto, Canada.

About Karooooo

Karooooo Ltd. provides mobility software-as-a-service (SaaS) platform for connected vehicles in South Africa, rest of Africa, Europe, the Asia-Pacific, the Middle East, and the United States. The company offers Fleet Telematics, a fleet management SaaS platform that provides real-time insights; LiveVision, which offers pro-active risk management and fleet visibility; MiFleet advanced fleet administration and business intelligence that provides cost management and administration capability services; and Karooooo Logistics, a software application for management of last mile delivery and general operational logistics. It provides Cartrack Field Service, a software application for management of field and on site workers; Business Intelligence for high-level view of fleet statistics; asset tracking for tracking and tracing moveable assets; asset recovery services that assists vehicle owners and insurance companies with the recovery of vehicles and other assets; and insurance telematics that allows insurers to tailor premiums for commercial and consumer customers using analytics; Protector, a safety package for consumer vehicles; and Car Watch, a mobile application that lets users track and watch their vehicles. In addition, the company offers specialist mobility solutions that include Bike Track, a GPS-based solution for commercial motorbike fleets; Credit Management that predicts payment cycles and facilitate active credit management for asset-based vehicle finance; electronic monitoring services application that allows law enforcement agencies to monitor persons of interest; and mobility and monitoring solutions, such as Carzuka, cartrack insurance agency, and on-demand rideshare taxi application, as well as smart IoT products. It provides its solutions through direct sales force to consumers and sole proprietors, small and medium-sized businesses, large enterprises, and other connected devices. Karooooo Ltd. was founded in 2001 and is headquartered in Singapore.