Critical Analysis: Smith Micro Software (NASDAQ:SMSI) versus Agilysys (NASDAQ:AGYS)

Agilysys (NASDAQ:AGYS) and Smith Micro Software (NASDAQ:SMSI) are both technology companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, analyst recommendations, earnings and valuation.

Insider and Institutional Ownership

88.0% of Agilysys shares are owned by institutional investors. Comparatively, 20.8% of Smith Micro Software shares are owned by institutional investors. 8.7% of Agilysys shares are owned by insiders. Comparatively, 34.7% of Smith Micro Software shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Agilysys and Smith Micro Software, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Agilysys	0	3	5	0	2.62
Smith Micro Software	1	0	2	0	2.33

Agilysys currently has a consensus target price of $124.60, indicating a potential upside of 19.25%. Smith Micro Software has a consensus target price of $12.50, indicating a potential upside of 331.03%. Given Smith Micro Software’s higher possible upside, analysts clearly believe Smith Micro Software is more favorable than Agilysys.

Profitability

This table compares Agilysys and Smith Micro Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Agilysys	12.99%	11.94%	8.20%
Smith Micro Software	-92.60%	-44.59%	-31.78%

Volatility & Risk

Agilysys has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500. Comparatively, Smith Micro Software has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.

Earnings & Valuation

This table compares Agilysys and Smith Micro Software”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Agilysys	$319.31 million	9.23	$38.79 million	$1.51	69.20
Smith Micro Software	$17.36 million	0.93	-$29.33 million	($3.52)	-0.82

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

Summary

Agilysys beats Smith Micro Software on 11 of the 14 factors compared between the two stocks.

About Agilysys

Agilysys, Inc. operates as a developer and marketer of software-enabled solutions and services to the hospitality industry in North America, Europe, the Asia-Pacific, and India. It offers software solutions fully integrated with third party hardware and operating systems; cloud applications, support, and maintenance; subscription and maintenance; and professional services. The company’s hospitality software solutions include hospitality experience cloud offers solution ecosystems that combine core operational systems for property management, point-of-sale (POS), and inventory and procurement; and Hospitality Solution Studios. Its food and beverage ecosystem solutions comprise InfoGenesis POS; IG Kiosk; IG Flex; IG KDS; IG OnDemand; IG Fly; IG Quick Pay; IG Smart Menu; IG Digital Menu Board; IG PanOptic AI-powered self-checkout kiosk; Pay, a payment processing solution; eCash for cashless tender; gift card solution; and Analyze, a cloud-based data analytic platform. The company’s inventory and procurement ecosystem solutions include Eatec solution and Stratton Warren System; LMS, a on-premise or hosted, web and mobile-enabled PMS solution; Versa, a hospitality solution; and Stay, a cloud-native SaaS property management system. Its hospitality and leisure and experience enhancer solutions comprise Book, Express Kiosk and Express Mobile for check-in and check-out; Spa software; Golf; Sales & Catering; Service; Authorize; DataMagine; Reserve solution; Digital Marketing solution; Retail POS solution; Central Reservations; Loyalty & Promotions; Membership; Residence Management; and Guest App. It serves hotels, resorts and cruise lines, casinos, corporate food service management, restaurants, universities, stadiums, and healthcare. The company was formerly known as Pioneer-Standard Electronics, Inc. and changed its name to Agilysys, Inc. in 2003. Agilysys, Inc. was founded in 1932 and is headquartered in Alpharetta, Georgia.

About Smith Micro Software

Smith Micro Software, Inc. engages in the development and sale of software to enhance the mobile experience to wireless and cable service providers in the Americas, Europe, the Middle East, and Africa. The company offers SafePath Family, SafePath IoT, SafePath Home, and SafePath Premium product suite, which provides tools to protect digital lifestyles and manage connected devices inside and outside the home; and CommSuite, a messaging platform that helps mobile service provides deliver a next-generation voicemail experience to mobile subscribers, as well as enables multi-language voice-to-text (VTT) transcription messaging. It also offers ViewSpot, a retail display management platform that provides on-screen and interactive demos to wireless carriers and other smartphone retailers; and technical support and customer services. Smith Micro Software, Inc. was founded in 1982 and is headquartered in Pittsburgh, Pennsylvania.