Reviewing CDK Global (CDK) and Its Rivals

CDK Global (NASDAQ: CDK) is one of 104 publicly-traded companies in the “Enterprise Software” industry, but how does it compare to its competitors? We will compare CDK Global to related businesses based on the strength of its earnings, valuation, dividends, institutional ownership, analyst recommendations, profitability and risk.

Analyst Recommendations

This is a summary of current ratings and recommmendations for CDK Global and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CDK Global 0 1 3 0 2.75
CDK Global Competitors 364 2182 4114 119 2.59

CDK Global currently has a consensus target price of $73.00, suggesting a potential upside of 15.40%. As a group, “Enterprise Software” companies have a potential upside of 0.15%. Given CDK Global’s stronger consensus rating and higher probable upside, research analysts plainly believe CDK Global is more favorable than its competitors.

Earnings and Valuation

This table compares CDK Global and its competitors gross revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
CDK Global $2.22 billion $295.60 million 30.71
CDK Global Competitors $1.82 billion $300.56 million 34.69

CDK Global has higher revenue, but lower earnings than its competitors. CDK Global is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares CDK Global and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CDK Global 13.42% 515.77% 13.57%
CDK Global Competitors -25.90% -210.59% -8.06%

Institutional & Insider Ownership

84.0% of CDK Global shares are held by institutional investors. Comparatively, 60.9% of shares of all “Enterprise Software” companies are held by institutional investors. 0.4% of CDK Global shares are held by insiders. Comparatively, 21.9% of shares of all “Enterprise Software” companies 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.

Dividends

CDK Global pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. CDK Global pays out 27.2% of its earnings in the form of a dividend. As a group, “Enterprise Software” companies pay a dividend yield of 0.8% and pay out 31.7% of their earnings in the form of a dividend. CDK Global is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Volatility and Risk

CDK Global has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, CDK Global’s competitors have a beta of 1.06, indicating that their average stock price is 6% more volatile than the S&P 500.

Summary

CDK Global beats its competitors on 10 of the 15 factors compared.

About CDK Global

CDK Global, Inc. provides integrated information technology and digital marketing solutions. The Company’s segments include Retail Solutions North America, Advertising North America and CDK International. Through its Retail Solutions North America segment, the Company provides technology-based solutions, including automotive Website platforms, that help automotive retailers, original equipment manufacturers (OEMs) and other industry participants manage the acquisition, sale, financing, insuring, parts supply, repair and maintenance of vehicles. Through its Advertising North America segment, the Company provides advertising solutions, including management of digital advertising spend, for OEMs and automotive retailers. As of June 30, 2016, through its CDK International segment, it provided technology-based solutions similar to the retail solutions provided in its Retail Solutions North America segment in approximately 100 countries outside of the United States and Canada.

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