Imperva (NASDAQ: SPSC) and SPS Commerce (NASDAQ:SPSC) are both small-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

95.1% of SPS Commerce shares are owned by institutional investors. 1.1% of Imperva shares are owned by insiders. Comparatively, 3.6% of SPS Commerce shares are owned 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 & Valuation

This table compares Imperva and SPS Commerce’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Imperva $321.72 million 5.00 $22.86 million ($0.28) -165.54
SPS Commerce $220.57 million 7.77 -$2.44 million $0.42 233.38

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

Profitability

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

Net Margins Return on Equity Return on Assets
Imperva -8.59% -6.92% -4.09%
SPS Commerce 0.61% 4.25% 3.56%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Imperva and SPS Commerce, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Imperva 2 8 6 0 2.25
SPS Commerce 0 0 7 0 3.00

Imperva presently has a consensus price target of $54.09, indicating a potential upside of 16.70%. SPS Commerce has a consensus price target of $83.83, indicating a potential downside of 14.47%. Given Imperva’s higher probable upside, analysts clearly believe Imperva is more favorable than SPS Commerce.

Risk and Volatility

Imperva has a beta of 1.65, suggesting that its stock price is 65% more volatile than the S&P 500. Comparatively, SPS Commerce has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.

Summary

SPS Commerce beats Imperva on 10 of the 14 factors compared between the two stocks.

About Imperva

Imperva, Inc. engages in the development, market, sale, and support of cyber security solutions that protect business critical data and applications in the cloud or on premises worldwide. The company's SecureSphere product line provides database, file, and Web application security in various data centers, including on-premises data centers, as well as in private, public, and hybrid cloud computing environments. Its SecureSphere product also secures business-critical applications and data; and provides an accelerated route to address regulatory compliance and establishes a repeatable process for data risk management. The company's Incapsula service delivers cloud-based Website security, distributed denial of service protection, and load balancing and failover; and is designed to deploy and accessible to businesses that need to optimize the security, speed, and availability of their Websites. Its products also include ThreatRadar that provides reputation and crowdsourced security intelligence services; CounterBreach, which protects enterprise data from theft and loss due to compromised, malicious, and careless users; and Imperva Camouflage Data Masking that creates functional data for development, testing, and training by disguising sensitive information while maintaining the characteristics of the original data. In addition, the company provides ongoing product support services for hardware and software; and professional and training services. Imperva, Inc. offers its products and services to banks, retailers, insurers, technology and telecommunication companies, and hospitals; and the United States and other national, state, and local government agencies through a network of distributors and resellers. The company was founded in 2002 and is headquartered in Redwood Shores, California.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It provides solutions through the SPS Commerce platform, a cloud-based product suite that enhances the way retailers, suppliers, distributors, logistics firms, and other trading partners manage and fulfill orders, manage sell-through performance, and source new items. The company offers Trading Partner Fulfillment solution, which provides fulfillment automation and replaces or augments an organization's existing trading partner electronic communication infrastructure; Trading Partner Analytics solution that comprises data analytics applications to enhance visibility and analysis of customers supply chains; and Trading Partner Assortment solution to manage individual attributes associated with each item a retailer or supplier sells. It also provides Trading Partner Sourcing solution that enables retailers to source providers of new items, suppliers to connect with new retailers, and retailing community; Trading Partner Community Development solution, which offers communications programs that enables retailers, suppliers, and emerging providers of value-added products and services to establish trading partner relationships with new trading partners to expand their businesses; and Other Trading Partner Solutions, such as barcode labeling, planogram services, and scan and pack application that helps trading partners process information to streamline the picking and packaging process. The company sells its solutions primarily through retail sales professionals and supplier sales representatives to small- to mid-sized suppliers in the consumer packaged goods industry, as well as retailers, distributors, third-party logistics providers, and other trading partners. 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.

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