Contrasting Performant Financial Corporation (PFMT) and The Advisory Board (ABCO)

Performant Financial Corporation (NASDAQ: PFMT) and The Advisory Board (NASDAQ:ABCO) are both business services companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Performant Financial Corporation and The Advisory Board, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Performant Financial Corporation 0 1 0 0 2.00
The Advisory Board 1 10 3 0 2.14

The Advisory Board has a consensus price target of $51.21, suggesting a potential downside of 4.01%. Given The Advisory Board’s stronger consensus rating and higher probable upside, analysts clearly believe The Advisory Board is more favorable than Performant Financial Corporation.

Valuation & Earnings

This table compares Performant Financial Corporation and The Advisory Board’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Performant Financial Corporation $134.02 million 0.70 $6.52 million ($0.36) -5.14
The Advisory Board $799.15 million 2.72 $120.83 million $2.69 19.83

The Advisory Board has higher revenue and earnings than Performant Financial Corporation. Performant Financial Corporation is trading at a lower price-to-earnings ratio than The Advisory Board, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Performant Financial Corporation and The Advisory Board’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Performant Financial Corporation -13.74% -6.81% -3.17%
The Advisory Board 13.65% 12.69% 3.30%

Risk & Volatility

Performant Financial Corporation has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, The Advisory Board has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Insider and Institutional Ownership

54.7% of Performant Financial Corporation shares are owned by institutional investors. 33.6% of Performant Financial Corporation shares are owned by insiders. Comparatively, 4.7% of The Advisory Board shares are owned 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.

Summary

The Advisory Board beats Performant Financial Corporation on 11 of the 13 factors compared between the two stocks.

Performant Financial Corporation Company Profile

Performant Financial Corporation (Performant) provides technology-enabled recovery and related analytics services in the United States. The Company’s services identify and recover delinquent or defaulted assets and improper payments for both government and private clients in a range of markets. The Company provides its services on an outsourced basis where the Company handles many or all aspects of its clients’ recovery processes. The Company uses its technology-enabled services platform to provide recovery and analytics services in a range of markets for the identification and recovery of student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. It provides recovery services to the government-supported student loan industry and its clients include the Department of Education and Guaranty Agencies, as well as private financial institutions. The Company provides recovery services related to improper payments in the healthcare market.

The Advisory Board Company Profile

The Advisory Board Company is a provider of software and solutions to the healthcare and higher education industries. The Company offers subscription-based membership programs, software and data-enabled services. All of its programs are rooted in best practices and extends across four areas, including Best practices research, Technology, Data-enabled services and Consulting services. The best practices research and insight programs provide the foundation for all of its other programs. The Company offers technology analytics programs anchored by cloud-based software applications that surface performance improvement opportunities to accelerate progress. Through its consulting services, the Company provides on-the-ground support for performance improvement initiatives, as well as best practice professional management of areas of the hospital or medical group. The Company’s data-enabled services are primarily focused in the area of enrollment management.

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