Financial Contrast: Ceridian HCM (NYSE:CDAY) versus Shopify (NYSE:SHOP)

Shopify (NYSE:SHOP) and Ceridian HCM (NYSE:CDAY) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Shopify and Ceridian HCM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shopify	16.84%	11.60%	9.37%
Ceridian HCM	0.28%	2.03%	0.51%

Institutional & Insider Ownership

69.3% of Shopify shares are held by institutional investors. 4.5% of Ceridian HCM shares 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.

Risk and Volatility

Shopify has a beta of 2.46, meaning that its share price is 146% more volatile than the S&P 500. Comparatively, Ceridian HCM has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Shopify and Ceridian HCM, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shopify	1	15	23	1	2.60
Ceridian HCM	0	0	2	0	3.00

Shopify currently has a consensus price target of $99.03, suggesting a potential downside of 10.12%. Ceridian HCM has a consensus price target of $80.50, suggesting a potential upside of 7.56%. Given Ceridian HCM’s stronger consensus rating and higher probable upside, analysts clearly believe Ceridian HCM is more favorable than Shopify.

Valuation and Earnings

This table compares Shopify and Ceridian HCM”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shopify	$8.21 billion	17.34	$132.00 million	$1.07	102.97
Ceridian HCM	$1.45 billion	8.06	-$73.40 million	$0.03	2,494.67

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

Summary

Shopify beats Ceridian HCM on 11 of the 15 factors compared between the two stocks.

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.

About Ceridian HCM

Ceridian HCM Holding Inc., together with its subsidiaries, operates as a human capital management (HCM) software company in the United States, Canada, and internationally. It offers Dayforce, a cloud HCM platform that provides human resources, payroll, benefits, workforce management, and talent management functionality; and Powerpay, a cloud HR and payroll solution for the small business market. The company also provides Bureau solutions for payroll and payroll-related services. It sells its solutions through direct sales force and third-party channels. The company was incorporated in 2013 and is headquartered in Minneapolis, Minnesota.