Analyzing SPS Commerce (NASDAQ:SPSC) and Brookfield Business Partners (NYSE:BBU)

SPS Commerce (NASDAQ:SPSC) and Brookfield Business Partners (NYSE:BBU) are both mid-cap business services companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, earnings, valuation, dividends, institutional ownership and risk.

Volatility & Risk

SPS Commerce has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Brookfield Business Partners has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Institutional and Insider Ownership

99.0% of SPS Commerce shares are held by institutional investors. Comparatively, 85.0% of Brookfield Business Partners shares are held by institutional investors. 1.0% of SPS Commerce shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares SPS Commerce and Brookfield Business Partners”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SPS Commerce	$751.51 million	2.86	$93.34 million	$2.45	23.74
Brookfield Business Partners	$27.46 billion	0.10	-$26.00 million	($0.26)	-121.00

SPS Commerce has higher earnings, but lower revenue than Brookfield Business Partners. Brookfield Business Partners is trading at a lower price-to-earnings ratio than SPS Commerce, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SPS Commerce and Brookfield Business Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SPS Commerce	12.42%	12.73%	10.62%
Brookfield Business Partners	1.41%	2.67%	0.51%

Analyst Recommendations

This is a summary of current ratings and recommmendations for SPS Commerce and Brookfield Business Partners, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SPS Commerce	1	8	2	1	2.25
Brookfield Business Partners	2	0	6	0	2.50

SPS Commerce presently has a consensus price target of $84.91, suggesting a potential upside of 45.97%. Brookfield Business Partners has a consensus price target of $43.00, suggesting a potential upside of 36.68%. Given SPS Commerce’s higher possible upside, equities research analysts plainly believe SPS Commerce is more favorable than Brookfield Business Partners.

Summary

SPS Commerce beats Brookfield Business Partners on 11 of the 15 factors compared between the two stocks.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions in the United States and internationally. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, grocers, suppliers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment, an electronic data interchange solution that scales as a business grows, where companies use a single system to manage orders and logistics from various sales channels, including wholesale, eCommerce, and marketplaces; and Analytics product that enables organizations to enhance visibility into how products are selling through a single connection across various sales channels, including wholesale, eCommerce, and marketplaces, as well as enhances access and usage of sales and inventory data through a combination of analytics applications, network of connections, and industry-leading expertise. In addition, it offers various complimentary products, such as assortment product, which simplifies the communication of robust, accurate item data by automatically translating item attributes, and hierarchies; and community product that allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through change management and onboarding programs. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

About Brookfield Business Partners

Brookfield Business Partners L.P. is a private equity firm specializing in acquisition. The firm typically invests in business services, infrastructure services, construction, energy, and industrials sector. It prefers to take majority stake in companies. The firm seeks returns of at least 15% on its investments. Brookfield Business Partners L.P. was founded in 2016 and is based in Hamilton, Bermuda. Brookfield Business Partners L.P. operates as a subsidiary of Brookfield Corporation.