Critical Review: ACI Worldwide (NASDAQ:ACIW) and Sprout Social (NASDAQ:SPT)

ACI Worldwide (NASDAQ:ACIWGet Rating) and Sprout Social (NASDAQ:SPTGet Rating) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for ACI Worldwide and Sprout Social, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ACI Worldwide 0 1 1 0 2.50
Sprout Social 0 1 8 0 2.89

ACI Worldwide currently has a consensus target price of $30.80, indicating a potential upside of 6.24%. Sprout Social has a consensus target price of $72.11, indicating a potential upside of 20.05%. Given Sprout Social’s stronger consensus rating and higher possible upside, analysts clearly believe Sprout Social is more favorable than ACI Worldwide.

Valuation & Earnings

This table compares ACI Worldwide and Sprout Social’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ACI Worldwide $1.37 billion 2.38 $127.79 million $1.38 21.01
Sprout Social $187.86 million 17.53 -$28.70 million ($0.88) -68.26

ACI Worldwide has higher revenue and earnings than Sprout Social. Sprout Social is trading at a lower price-to-earnings ratio than ACI Worldwide, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

97.6% of ACI Worldwide shares are held by institutional investors. Comparatively, 86.3% of Sprout Social shares are held by institutional investors. 1.8% of ACI Worldwide shares are held by insiders. Comparatively, 13.3% of Sprout Social shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares ACI Worldwide and Sprout Social’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ACI Worldwide 11.23% 15.27% 5.79%
Sprout Social -20.30% -33.90% -17.70%

Volatility and Risk

ACI Worldwide has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Sprout Social has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Summary

ACI Worldwide beats Sprout Social on 9 of the 14 factors compared between the two stocks.

About ACI Worldwide

(Get Rating)

ACI Worldwide, Inc., a software company, develops, markets, installs, and supports a range of software products and solutions for facilitating digital payments to banks, merchants, and billers worldwide. The company offers ACI Acquiring, a merchant management system to deliver digital innovation, improve fraud prevention, and reduce interchange fees; ACI Issuing, a digital payments issuing solution; and ACI Enterprise Payments Platform that provides payment processing and orchestration capabilities for digital payments. It also provides ACI Low Value Real-Time Payments, a platform for processing real-time payments; and ACI High Value Real-Time Payments, a payments engine that offers multi-bank, multi-currency, 24×7 payment processing, and SWIFT messaging. In addition, the company offers ACI Omni Commerce, a scalable, omni-channel payment processing platform; ACI Secure eCommerce solution; ACI Fraud Management, a real-time approach to fraud management; ACI Digital Business Banking, a cloud-based digital banking platform; and ACI Speedpay, an integrated suite of digital billing, payment, disbursement, and communication services. The company offers electronic bill presentment and payment services to consumer finance, insurance, healthcare, higher education, utility, government, and mortgage sectors; implementation services, including product installations and configurations, and custom software modifications; and business and technical consultancy, on-site support, product education, and testing services, as well as distributes or acts as a sales agent for software developed by third parties. It markets its products under the ACI Worldwide brand. The company was formerly known as Transaction Systems Architects, Inc. and changed its name to ACI Worldwide, Inc. in July 2007. The company was founded in 1975 and is based in Coral Gables, Florida.

About Sprout Social

(Get Rating)

Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It provides cloud software that brings together social messaging, data, and workflows in a unified system of record, intelligence, and action. The company offers provides various integrated tools in a range of functions comprising social engagement/response, publishing, reporting and analytics, social listening and business intelligence, reputation management, employee advocacy, and automation and workflows. Its tools serve a range of use-cases within its customers' organizations, including social and community management, public relations, marketing, customer service and care, commerce, sales and customer acquisition, recruiting and hiring, product development, and business strategy. The company also offers professional services, which primarily consist of consulting and training services. It serves approximately more than 31,000 customers across small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. The company was incorporated in 2010 and is headquartered in Chicago, Illinois.

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