Critical Survey: PaySign (NASDAQ:PAYS) versus Steel Connect (NASDAQ:STCN)

PaySign (NASDAQ:PAYS) and Steel Connect (NASDAQ:STCN) are both small-cap business services companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Profitability

This table compares PaySign and Steel Connect’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PaySign 19.56% 66.05% 16.55%
Steel Connect -6.58% -36.69% -3.54%

Analyst Recommendations

This is a summary of recent ratings for PaySign and Steel Connect, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PaySign 0 1 4 0 2.80
Steel Connect 0 0 0 0 N/A

PaySign currently has a consensus price target of $13.20, indicating a potential upside of 41.33%. Given PaySign’s higher probable upside, equities research analysts plainly believe PaySign is more favorable than Steel Connect.

Risk and Volatility

PaySign has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Steel Connect has a beta of 0.07, meaning that its stock price is 93% less volatile than the S&P 500.

Institutional and Insider Ownership

30.8% of PaySign shares are held by institutional investors. Comparatively, 50.8% of Steel Connect shares are held by institutional investors. 38.6% of PaySign shares are held by company insiders. Comparatively, 12.5% of Steel Connect shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares PaySign and Steel Connect’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PaySign $23.42 million 19.11 $2.57 million $0.09 103.78
Steel Connect $819.83 million 0.11 -$66.73 million N/A N/A

PaySign has higher earnings, but lower revenue than Steel Connect.

Summary

PaySign beats Steel Connect on 10 of the 12 factors compared between the two stocks.

PaySign Company Profile

PaySign, Inc. provides prepaid card programs and processing services under the PaySign brand to corporations, government agencies, universities, and other organizations. The company offers various services, including transaction processing, cardholder enrollment, value loading, cardholder account management, reporting, and customer service through PaySign, a proprietary card-processing platform. It also develops prepaid card products for healthcare reimbursement payments, pharmaceutical assistance, donor compensation, corporate and incentive rewards, and expense reimbursement cards; and payroll or general purpose reloadable cards, as well as gift or incentive cards. In addition, the company offers Buy and Bill programs for patients to purchase directly from physician's office or through an infusion center for physician administered therapies; payment solution for source plasma collection centers; and PaySign Premier, a demand deposit account debit card, as well as customer service center and PaySign Communications Suite services. Its principal target markets for processing services comprise prepaid card issuers, retail and private-label issuers, small third-party processors, and small and mid-size financial institutions in the United States and internationally. The company was formerly known as 3PEA International, Inc. and changed its name to PaySign, Inc. in April 2019. PaySign, Inc. was incorporated in 1995 and is based in Henderson, Nevada.

Steel Connect Company Profile

Steel Connect, Inc., through its subsidiaries, provides supply chain and logistics services to the consumer electronics, communications, computing, medical devices, software, storage, retail, and other industries. It operates through five segments: Americas, Asia, Europe, Direct Marketing, and e-Business. The company offers product configuration and packaging, kitting, and assembly of components and parts into finished goods; and value-added processes, such as product testing, radio frequency identification (RFID) tagging, product or service activation, language settings, personalization and engraving, multi-channel packaging, and packaging design services. It also provides fulfillment services, including order management, pick, pack and ship, retail compliance, and demand planning services; and content protection and activation, and IP security services, as well as optimizes component and finished goods inventory levels. In addition, it offers operates a cloud-based e-commerce platform, which online buying experience so that products can be purchased, serviced, and delivered worldwide; and provides reverse logistics services that simplifies the returns process for retailers and manufacturers to improve service parts management and the value of returned assets. Further, the company offers EZ Connect service, which provides essential fulfillment capabilities for emerging growth companies without the expensive surprises associated with third-party fulfillment services; and direct marketing services comprising end-to-end services for paper-based direct marketing and omnichannel marketing campaign services. The company was formerly known as ModusLink Global Solutions, Inc. and changed its name to Steel Connect, Inc. in February 2018. Steel Connect, Inc. was incorporated in 1986 and is headquartered in Waltham, Massachusetts.

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