Critical Review: Crawford & Company (NYSE:CRD.B) & SPS Commerce (NASDAQ:SPSC)

SPS Commerce (NASDAQ:SPSC) and Crawford & Company (NYSE:CRD.B) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Profitability

This table compares SPS Commerce and Crawford & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SPS Commerce	11.79%	12.10%	10.08%
Crawford & Company	2.18%	25.91%	5.26%

Valuation & Earnings

This table compares SPS Commerce and Crawford & Company”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SPS Commerce	$729.76 million	4.30	$77.05 million	$2.23	37.36
Crawford & Company	$1.34 billion	0.38	$26.60 million	$0.59	17.54

SPS Commerce has higher earnings, but lower revenue than Crawford & Company. Crawford & Company is trading at a lower price-to-earnings ratio than SPS Commerce, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for SPS Commerce and Crawford & Company, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SPS Commerce	1	8	2	1	2.25
Crawford & Company	0	0	0	0	0.00

SPS Commerce currently has a consensus price target of $106.80, suggesting a potential upside of 28.20%. Given SPS Commerce’s stronger consensus rating and higher probable upside, research analysts plainly believe SPS Commerce is more favorable than Crawford & Company.

Institutional and Insider Ownership

99.0% of SPS Commerce shares are owned by institutional investors. Comparatively, 11.0% of Crawford & Company shares are owned by institutional investors. 1.0% of SPS Commerce shares are owned by insiders. Comparatively, 51.0% of Crawford & Company shares are owned by 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.

Risk & Volatility

SPS Commerce has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Crawford & Company has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Summary

SPS Commerce beats Crawford & Company on 11 of the 15 factors compared between the two stocks.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions in the United States and internationally. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, grocers, suppliers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment, an electronic data interchange solution that scales as a business grows, where companies use a single system to manage orders and logistics from various sales channels, including wholesale, eCommerce, and marketplaces; and Analytics product that enables organizations to enhance visibility into how products are selling through a single connection across various sales channels, including wholesale, eCommerce, and marketplaces, as well as enhances access and usage of sales and inventory data through a combination of analytics applications, network of connections, and industry-leading expertise. In addition, it offers various complimentary products, such as assortment product, which simplifies the communication of robust, accurate item data by automatically translating item attributes, and hierarchies; and community product that allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through change management and onboarding programs. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

About Crawford & Company

Crawford & Co. engages in the provision of claims management and outsourcing solutions to carriers, brokers, and corporates. It operates through the following segments: Crawford Loss Adjusting, Crawford TPA Solutions, and Crawford Platform Solutions. The Crawford Loss Adjusting segment consists of adjusting services provided to insurance companies and self-insured entities related to property and casualty losses caused by physical damage to commercial and residential real property and certain types of personal property. The Crawford TPA Solutions segment provides third party administration for workers’ compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers, and insurers worldwide. The Crawford Platform Solutions segment is involved in the management of contractor networks and the provision of claims management services to insurance companies and self-insured entities related to property, casualty, and catastrophic losses. The company was founded by Jim Crawford in 1941 and is headquartered in Peachtree Corners, GA.