Critical Analysis: The Advisory Board (ABCO) & Vantiv (VNTV)

The Advisory Board (NASDAQ: ABCO) and Vantiv (NYSE:VNTV) are both mid-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Volatility and Risk

The Advisory Board has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, Vantiv has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for The Advisory Board and Vantiv, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Advisory Board 1 11 3 0 2.13
Vantiv 0 10 17 0 2.63

The Advisory Board presently has a consensus target price of $51.44, suggesting a potential downside of 4.56%. Vantiv has a consensus target price of $75.25, suggesting a potential upside of 6.26%. Given Vantiv’s stronger consensus rating and higher probable upside, analysts clearly believe Vantiv is more favorable than The Advisory Board.

Profitability

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

Net Margins Return on Equity Return on Assets
The Advisory Board 13.65% 12.69% 3.30%
Vantiv 5.58% 33.54% 8.00%

Earnings & Valuation

This table compares The Advisory Board and Vantiv’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Advisory Board $799.15 million 2.74 $120.83 million $2.69 20.04
Vantiv $3.80 billion 3.01 $880.01 million $1.29 54.90

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

Institutional & Insider Ownership

80.2% of Vantiv shares are held by institutional investors. 4.7% of The Advisory Board shares are held by insiders. Comparatively, 1.3% of Vantiv shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Vantiv beats The Advisory Board on 9 of the 14 factors compared between the two stocks.

About The Advisory Board

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.

About Vantiv

Vantiv, Inc. is a holding company. The Company conducts its operations through its subsidiary, Vantiv Holding, LLC. The Company is a payment processor. The Company’s segments include Merchant Services and Financial Institution Services. The Company offers a range of payment processing services that enable its clients to meet their payment processing needs through a single provider. The Company enables merchants to accept and process credit, debit and prepaid payments, and provide them supporting value-added services, such as security solutions and fraud management, information solutions and interchange management. It also provides payment services to financial institutions, such as card issuer processing, payment network processing, fraud protection, card production, prepaid program management, automated teller machine (ATM) driving and network gateway and switching services that utilize the Company’s Jeanie personal identification number (PIN) debit payment network.

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