Critical Analysis: Donnelley Financial Solutions (NYSE:DFIN) and Performant Healthcare, Inc. – Common Stock (NASDAQ:PHLT)

Performant Healthcare, Inc. – Common Stock (NASDAQ:PHLT) and Donnelley Financial Solutions (NYSE:DFIN) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Insider and Institutional Ownership

77.2% of Performant Healthcare, Inc. – Common Stock shares are held by institutional investors. Comparatively, 93.8% of Donnelley Financial Solutions shares are held by institutional investors. 9.2% of Performant Healthcare, Inc. – Common Stock shares are held by insiders. Comparatively, 11.9% of Donnelley Financial Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Performant Healthcare, Inc. – Common Stock and Donnelley Financial Solutions”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Performant Healthcare, Inc. – Common Stock	$122.98 million	1.69	-$7.52 million	($0.13)	-20.46
Donnelley Financial Solutions	$781.90 million	1.53	$82.20 million	$3.06	13.68

Donnelley Financial Solutions has higher revenue and earnings than Performant Healthcare, Inc. – Common Stock. Performant Healthcare, Inc. – Common Stock is trading at a lower price-to-earnings ratio than Donnelley Financial Solutions, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Performant Healthcare, Inc. – Common Stock has a beta of 0.03, indicating that its share price is 97% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500.

Profitability

This table compares Performant Healthcare, Inc. – Common Stock and Donnelley Financial Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Performant Healthcare, Inc. – Common Stock	-6.74%	-10.19%	-7.83%
Donnelley Financial Solutions	11.82%	20.65%	10.41%

Analyst Ratings

This is a summary of recent ratings and target prices for Performant Healthcare, Inc. – Common Stock and Donnelley Financial Solutions, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Performant Healthcare, Inc. – Common Stock	0	0	0	1	4.00
Donnelley Financial Solutions	0	0	3	0	3.00

Donnelley Financial Solutions has a consensus price target of $71.33, indicating a potential upside of 70.37%. Given Donnelley Financial Solutions’ higher possible upside, analysts clearly believe Donnelley Financial Solutions is more favorable than Performant Healthcare, Inc. – Common Stock.

Summary

Donnelley Financial Solutions beats Performant Healthcare, Inc. – Common Stock on 12 of the 15 factors compared between the two stocks.

About Performant Healthcare, Inc. – Common Stock

Performant Healthcare, Inc. engages in the provision of technology-enabled audit, recovery, customer care, and related analytics services. Its services help identify improper payments, and in some markets, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients. The company was founded in 1976 and is headquartered in Plantation, FL.

About Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. provides innovative software and technology-enabled financial regulatory and compliance solutions in the United States, Asia, Europe, Canada, and internationally. It operates through four segments: Capital Markets Software Solutions (CM-SS); Capital Markets Compliance and Communications Management (CM-CCM); Investment Companies Software Solutions (IC-SS); and Investment Companies Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue and ActiveDisclosure solutions to public and private companies to manage public and private transactional and compliance processes; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro, and ArcRegulatory, as well as services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators and investors. The IC-CCM segment offers tech-enabled solutions for creating, filing and distributing regulatory communications, and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant for Investment Company Act through the SEC’s EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.