Helios and Matheson Analytics Inc. (NASDAQ:HMNY) shares are up more than 63.33% this year and recently decreased -5.11% or -$0.29 to settle at $5.39. Fidelity National Information Services, Inc. (NYSE:FIS), on the other hand, is up 24.27% year to date as of 12/27/2017. It currently trades at $94.00 and has returned -1.05% during the past week.
Helios and Matheson Analytics Inc. (NASDAQ:HMNY) and Fidelity National Information Services, Inc. (NYSE:FIS) are the two most active stocks in the Information Technology Services industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, FIS is expected to grow at a 12.42% annual rate. All else equal, FIS’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of 31.28% for Fidelity National Information Services, Inc. (FIS). HMNY’s ROI is -17.50% while FIS has a ROI of 4.90%. The interpretation is that FIS’s business generates a higher return on investment than HMNY’s.
Cash is king when it comes to investing. HMNY’s free cash flow (“FCF”) per share for the trailing twelve months was -0.36. Comparatively, FIS’s free cash flow per share was +1.26. On a percent-of-sales basis, HMNY’s free cash flow was -0.08% while FIS converted 4.55% of its revenues into cash flow. This means that, for a given level of sales, FIS is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. HMNY has a current ratio of 0.20 compared to 1.30 for FIS. This means that FIS can more easily cover its most immediate liabilities over the next twelve months.
HMNY trades at a P/S of 27.40, compared to a forward P/E of 19.34, a P/B of 3.12, and a P/S of 3.42 for FIS. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. HMNY is currently priced at a -78.44% to its one-year price target of 25.00. Comparatively, FIS is -9.21% relative to its price target of 103.54. This suggests that HMNY is the better investment over the next year.
The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.00 for HMNY and 1.80 for FIS, which implies that analysts are more bullish on the outlook for HMNY.
Risk and Volatility
Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. HMNY has a beta of 0.17 and FIS’s beta is 0.89. HMNY’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
Short interest is another tool that analysts use to gauge investor sentiment. It represents the percentage of a stock’s tradable shares that are being shorted. HMNY has a short ratio of 0.49 compared to a short interest of 2.25 for FIS. This implies that the market is currently less bearish on the outlook for HMNY.
Fidelity National Information Services, Inc. (NYSE:FIS) beats Helios and Matheson Analytics Inc. (NASDAQ:HMNY) on a total of 8 of the 14 factors compared between the two stocks. FIS has lower financial risk, is more profitable, generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate and higher liquidity. Finally, FB has better sentiment signals based on short interest.