Reviewing NIC (EGOV) and Digipath (DIGP)

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NIC (NASDAQ:EGOV) and Digipath (OTCMKTS:DIGP) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

89.4% of NIC shares are owned by institutional investors. Comparatively, 0.5% of Digipath shares are owned by institutional investors. 4.1% of NIC shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for NIC and Digipath, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NIC 0 3 0 0 2.00
Digipath 0 0 0 0 N/A

NIC currently has a consensus target price of $15.50, indicating a potential upside of 16.37%. Given NIC’s higher probable upside, analysts clearly believe NIC is more favorable than Digipath.

Profitability

This table compares NIC and Digipath’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NIC 16.94% 32.21% 20.19%
Digipath -58.20% -126.57% -103.96%

Earnings & Valuation

This table compares NIC and Digipath’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NIC $336.51 million 2.64 $51.61 million $0.77 17.30
Digipath $2.84 million 2.62 -$1.65 million N/A N/A

NIC has higher revenue and earnings than Digipath.

Risk & Volatility

NIC has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, Digipath has a beta of 2.8, suggesting that its stock price is 180% more volatile than the S&P 500.

Dividends

NIC pays an annual dividend of $0.32 per share and has a dividend yield of 2.4%. Digipath does not pay a dividend. NIC pays out 41.6% of its earnings in the form of a dividend.

Summary

NIC beats Digipath on 10 of the 12 factors compared between the two stocks.

About NIC

NIC Inc., together with its subsidiaries, provides digital government services that enable governments to use technology to provide various services to businesses and citizens in the United States. The company's outsourced portal business enters into long-term contracts with state and local governments to design, build, and operate Internet-based and enterprise-wide portals on their behalf. Its portals consist of Websites and applications that enable businesses and citizens to access government information online and secure transactions, such as applying for a permit, retrieving government records, or filing a government-mandated form or report. The company's portal service offerings include motor vehicle driver history record retrieval; vehicle title, lien, and registration; motor vehicle inspections; temporary vehicle tags; driver's license renewal; hunting and fishing licenses; health professional license services; professional license renewal; business registrations and renewals; secretary of state business searches; Uniform Commercial Code (UCC) searches and filings; limited criminal history searches; court services; vital records; income and property tax payments; and payment processing products and services. Its software & services business provides software development and payment processing services to state and local governments, as well as federal agencies. In addition, the company develops and manages the pre-employment screening program for motor carriers using transaction-based business model. Further, it offers consulting, application development, and portal management services to governments. NIC Inc. was founded in 1991 and is based in Olathe, Kansas.

About Digipath

Digipath, Inc., together with its subsidiaries, provides cannabis related testing services in the United States. The company offers cannabis lab testing services in Las Vegas to Nevada licensed medical marijuana enterprises. It also provides a balanced and unbiased approach to cannabis news, interviews, and education with a news/talk radio show, app, national marijuana news Website, and social media presence focusing on the political, economic, medicinal, scientific, and cultural dimensions of medicinal and recreational marijuana industry. DigiPath, Inc. was incorporated in 2010 and is headquartered in Las Vegas, Nevada.

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