Scientific Games (NASDAQ:SGMS) and Travelzoo (NASDAQ:TZOO) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, dividends, analyst recommendations, risk, institutional ownership, earnings and valuation.

Institutional and Insider Ownership

66.1% of Scientific Games shares are held by institutional investors. Comparatively, 32.3% of Travelzoo shares are held by institutional investors. 40.5% of Scientific Games shares are held by insiders. Comparatively, 61.9% of Travelzoo shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Scientific Games and Travelzoo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Scientific Games -9.54% N/A -1.87%
Travelzoo 3.39% 20.97% 7.29%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Scientific Games and Travelzoo, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Scientific Games 1 1 4 0 2.50
Travelzoo 0 0 0 0 N/A

Scientific Games presently has a consensus target price of $47.00, indicating a potential upside of 111.90%. Given Scientific Games’ higher probable upside, research analysts plainly believe Scientific Games is more favorable than Travelzoo.

Valuation and Earnings

This table compares Scientific Games and Travelzoo’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Scientific Games $3.08 billion 0.66 -$242.30 million ($2.23) -9.95
Travelzoo $106.52 million 1.04 $3.53 million N/A N/A

Travelzoo has lower revenue, but higher earnings than Scientific Games.

Risk & Volatility

Scientific Games has a beta of 2.21, meaning that its stock price is 121% more volatile than the S&P 500. Comparatively, Travelzoo has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.

Summary

Travelzoo beats Scientific Games on 7 of the 12 factors compared between the two stocks.

Scientific Games Company Profile

Scientific Games Corporation develops technology-based products and services, and related content for the gaming, lottery, and interactive gaming industries worldwide. The company's Gaming segment sells new and used gaming machines, electronic table systems, video lottery terminals (VLTs), conversion game kits, and spare parts; slot, casino, and table-management systems; table products, including shufflers; and perpetual licenses to proprietary table games. It also leases VLTs and electronic table games, game themes, or other licensing arrangements; and provides installation and support services for casino management systems, such as ongoing hardware maintenance and software upgrade services. The company's Lottery segment designs, prints, and sells instant lottery games, as well as offers instant game-related services comprising game design, sales and marketing support, and inventory management; and provides lottery systems, including hardware, software, and instant game validation systems. It is also involved in supplying player loyalty programs, as well as providing merchandising services and interactive marketing campaigns; and sublicensing brands for lottery products, as well as providing lottery-related promotional products. In addition, this segment provides software, hardware, and related services for lottery operations, including draw systems, instant ticket validation systems, and sports wagering and keno systems; and lottery systems software maintenance and support services. The company's Interactive segment operates social casino-style, slot-based, and bingo-based games through Facebook, iOS, Android, and various other desktop and mobile platforms; and provides content through remote game server technology, to licensed online casino operators on desktop and mobile platforms, as well as play-for-fun and play-for-free white-label gaming for land-based casinos. Scientific Games Corporation was founded in 1984 and is headquartered in Las Vegas, Nevada.

Travelzoo Company Profile

Travelzoo Inc., together with its subsidiaries, provides travel, entertainment, and local deals from travel and entertainment companies, and local businesses in the Asia Pacific, Europe, and North America. The company's publications and products include Travelzoo Websites; Travelzoo iPhone and Android applications; Travelzoo Top 20 email newsletter; and Newsflash email alert service. It also operates the Travelzoo Network, a network of third-party Websites that list travel deals published by the company; and Local Deals and Getaway services, which allow its subscribers to purchase vouchers for deals from local businesses, including spas, hotels, and restaurants through the Travelzoo Website. The company serves airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was founded in 1998 and is headquartered in New York, New York.

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