Critical Review: Shopify (NASDAQ:SHOP) & SeaChange International (NASDAQ:SEAC)

SeaChange International (NASDAQ:SEAC) and Shopify (NASDAQ:SHOP) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Valuation & Earnings

This table compares SeaChange International and Shopify”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SeaChange International	$32.76 million	0.23	-$11.40 million	$0.38	8.68
Shopify	$8.88 billion	23.05	$2.02 billion	$1.35	116.44

Shopify has higher revenue and earnings than SeaChange International. SeaChange International is trading at a lower price-to-earnings ratio than Shopify, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

69.3% of Shopify shares are held by institutional investors. 3.9% of SeaChange International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

SeaChange International has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500. Comparatively, Shopify has a beta of 2.83, indicating that its stock price is 183% more volatile than the S&P 500.

Profitability

This table compares SeaChange International and Shopify’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SeaChange International	N/A	N/A	N/A
Shopify	16.65%	11.72%	9.73%

Analyst Ratings

This is a breakdown of current ratings and target prices for SeaChange International and Shopify, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SeaChange International	0	0	0	0	0.00
Shopify	0	23	22	0	2.49

Shopify has a consensus price target of $168.69, suggesting a potential upside of 7.31%. Given Shopify’s stronger consensus rating and higher probable upside, analysts clearly believe Shopify is more favorable than SeaChange International.

Summary

Shopify beats SeaChange International on 13 of the 14 factors compared between the two stocks.

About SeaChange International

SeaChange International, Inc. provides video delivery, advertising, streaming platforms, and emerging Free Ad-Supported Streaming TV (FAST) products and services that facilitate the aggregation, licensing, management and distribution of video and advertising content worldwide. It offers Operator TV Platform solutions including customer's current network with OTT video management solutions in a single deployment, digital video broadcasting – cable / quadrature amplitude modulation networks with OTT streaming, and immersive multiscreen experience and on demand services, as well as pre-integrated solutions, such as multi-content delivery networks including Broadpeak, Edgeware and HBO, multidigital rights management, and seamless integration with existing network components. The company also provides StreamVid, a cloud-based OTT video platform for operators and content owners that enables streaming services, including content ingestion, workflow automation, user management, content protection, billing and entitlement, and user applications for various device platforms, such as mobile devices or Smart TVs; Advanced advertising, a unified ad tech solution to insert adverts into various video feeds, including broadcast, internet protocol television, and OTT; and Xstream platform, a cloud-based content monetization platform that provides the range of capabilities, including generation and distribution of FAST channels, streaming enablement via content aggregation, and targeted insertion of advertisement from various demand sources. In addition, it provides professional, and maintenance and technical support services, as well as managed services. The company sells and markets its products and services through a direct sales process, as well as to systems integrators and value-added resellers. It serves cable system operators, telecommunications companies, and satellite operators, as well as broadcasters and other content providers. The company was incorporated in 1993 and is headquartered in Boston, Massachusetts.

About Shopify

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company’s platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping, and securing working capital. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is headquartered in Ottawa, Canada.