Critical Review: Sapiens International (NASDAQ:SPNS) and PowerSchool (NYSE:PWSC)

PowerSchool (NYSE:PWSC) and Sapiens International (NASDAQ:SPNS) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Profitability

This table compares PowerSchool and Sapiens International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PowerSchool	-7.51%	6.10%	2.83%
Sapiens International	12.92%	17.60%	11.59%

Earnings and Valuation

This table compares PowerSchool and Sapiens International”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PowerSchool	$740.86 million	6.27	-$31.14 million	($0.24)	-95.04
Sapiens International	$532.61 million	3.86	$62.44 million	$1.22	30.23

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

Institutional & Insider Ownership

65.3% of PowerSchool shares are held by institutional investors. Comparatively, 30.7% of Sapiens International shares are held by institutional investors. 0.6% of PowerSchool shares are held by company insiders. Comparatively, 16.0% of Sapiens International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

PowerSchool has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Sapiens International has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for PowerSchool and Sapiens International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PowerSchool	0	10	3	0	2.23
Sapiens International	1	0	2	0	2.33

PowerSchool currently has a consensus price target of $24.02, indicating a potential upside of 5.30%. Sapiens International has a consensus price target of $41.67, indicating a potential upside of 12.98%. Given Sapiens International’s stronger consensus rating and higher possible upside, analysts clearly believe Sapiens International is more favorable than PowerSchool.

Summary

Sapiens International beats PowerSchool on 10 of the 14 factors compared between the two stocks.

About PowerSchool

PowerSchool Holdings, Inc., together with its subsidiaries, offers cloud-based software to the K-12 education market in the United States, Canada, and internationally. Its solution embedded in school workflows and is used on daily basis by educators, students, administrators, and parents in schools and districts. In addition, the company provides cloud-based technology platform helps schools and districts manage state reporting and related compliance, special education, finance, human resource, talent, registration, attendance, funding, learning, instruction, behavior, grading, college and career readiness, assessments, and analytics. The company serves state departments of education, public school districts, charter schools, independent schools, virtual schools, and others. PowerSchool Holdings, Inc. was incorporated in 2020 and is headquartered in Folsom, California.

About Sapiens International

Sapiens International Corporation N.V. provides software solutions for the insurance industry in North America, the United Kingdom, Europe, the Middle East, Africa, the Asia Pacific, and internationally. The company provides various solutions for property and casualty commercial and personal lines, life and pensions, and reinsurance fields. It offers IDITSuite, an AI powered, end-to-end insurance software; DigitalSuite, a cloud-native, future-proof digital engagement platform; IDITGo, a pre-configured, data-enriched insurance launch and accelerator platform solutions; consultancy services for property and casualty commercial lines; and Tia Enterprise solution for customer engagement. The company also provides CoreSuite, an end-to-end cloud and digital PAS for individual and group products across life, health, wealth, and pensions; CustomerConnect, a dynamic self-service and persona-based portal to engage with insureds; AgentConnect, a portal for agents and brokers to focus on sales enablement, customer retention, and increasing customer value; and ReinsuranceMaster, a reinsurance automation software that provides insurers full financial control and flexibility over their entire reinsurance process. The company was founded in 1982 and is headquartered in Holon, Israel.