Analyzing American Software (NASDAQ:AMSWA) and Squarespace (NYSE:SQSP)

Squarespace (NYSE:SQSP) and American Software (NASDAQ:AMSWA) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Squarespace and American Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Squarespace	-0.70%	N/A	-0.84%
American Software	10.75%	8.90%	6.52%

Earnings & Valuation

This table compares Squarespace and American Software’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Squarespace	$1.01 billion	5.95	-$7.08 million	($0.05)	-875.60
American Software	$102.51 million	2.94	$11.37 million	$0.34	26.71

American Software has lower revenue, but higher earnings than Squarespace. Squarespace is trading at a lower price-to-earnings ratio than American Software, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Squarespace and American Software, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Squarespace	0	10	6	0	2.38
American Software	0	0	1	0	3.00

Squarespace presently has a consensus price target of $42.08, suggesting a potential downside of 3.89%. American Software has a consensus price target of $14.00, suggesting a potential upside of 54.19%. Given American Software’s stronger consensus rating and higher probable upside, analysts plainly believe American Software is more favorable than Squarespace.

Institutional & Insider Ownership

92.3% of Squarespace shares are held by institutional investors. Comparatively, 77.0% of American Software shares are held by institutional investors. 45.0% of Squarespace shares are held by insiders. Comparatively, 11.4% of American Software shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Squarespace has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, American Software has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Summary

American Software beats Squarespace on 9 of the 14 factors compared between the two stocks.

About Squarespace

Squarespace, Inc. operates platform for businesses and independent creators to build online presence, grow their brands, and manage their businesses across the internet in the United States and internationally. It enables users to manage their projects and businesses through websites, domains, e-commerce, marketing tools, scheduling, and hospitality services, as well as tools for managing a social media presence. It serves a range of industries and sizes from sole proprietors to enterprises. Squarespace, Inc. was founded in 2003 and is headquartered in New York, New York.

About American Software

American Software, Inc. develops, markets, and supports a range of computer business application software products in the United States and internationally. It operates through Supply Chain Management (SCM), Information Technology Consulting (IT Consulting), and Other segments. The SCM segment leverages a single platform spanning eight supply chain process areas including product, demand, inventory, network optimization supply, deploy aligned with integrated business planning and supply chain data management. The IT Consulting segment offers IT staffing and consulting services firm. Other segment provides purchasing and materials management, client order processing, financial, e-commerce, and traditional manufacturing software and services. In addition, it offers ongoing support and maintenance services; cloud hosting and managed services; and implementation and training services. The company markets its products through direct and indirect sales channels to the apparel and other soft goods, food and beverage, consumer packaged goods, consumer durable goods, wholesale distribution, specialty chemicals, and other process manufacturing industries. American Software, Inc. was incorporated in 1970 and is headquartered in Atlanta, Georgia.