Analyzing Where Food Comes From (NASDAQ:WFCF) & LegalZoom.com (NASDAQ:LZ)

LegalZoom.com (NASDAQ:LZ) and Where Food Comes From (NASDAQ:WFCF) are both small-cap industrials companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.

Insider & Institutional Ownership

82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 18.8% of Where Food Comes From shares are held by institutional investors. 7.4% of LegalZoom.com shares are held by company insiders. Comparatively, 53.5% of Where Food Comes From shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares LegalZoom.com and Where Food Comes From’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	2.13%	15.83%	5.08%
Where Food Comes From	5.78%	15.39%	10.24%

Earnings & Valuation

This table compares LegalZoom.com and Where Food Comes From”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LegalZoom.com	$756.04 million	1.48	$15.43 million	$0.09	72.56
Where Food Comes From	$24.89 million	2.98	$1.54 million	$0.28	53.21

LegalZoom.com has higher revenue and earnings than Where Food Comes From. Where Food Comes From is trading at a lower price-to-earnings ratio than LegalZoom.com, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

LegalZoom.com has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500. Comparatively, Where Food Comes From has a beta of 0.15, indicating that its share price is 85% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for LegalZoom.com and Where Food Comes From, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	2	6	0	0	1.75
Where Food Comes From	0	1	0	0	2.00

LegalZoom.com presently has a consensus target price of $7.30, suggesting a potential upside of 11.79%. Given LegalZoom.com’s higher probable upside, equities research analysts clearly believe LegalZoom.com is more favorable than Where Food Comes From.

Summary

LegalZoom.com beats Where Food Comes From on 7 of the 13 factors compared between the two stocks.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.

About Where Food Comes From

Where Food Comes From, Inc., together with its subsidiaries, operates as a third-party food verification company in North America. The company operates through Verification and Certification, and Professional Services segments. It conducts on-site and desk audits to verify that claims being made about livestock, food, other specialty crops, and agricultural and aquaculture products are accurate, as well as offers Where Food Comes From Source Verified retail and restaurant labeling program, which connects consumers directly to the source of the food they purchase through product labeling, and web-based information sharing and education. It also offers professional services and technology solutions; verification solutions; and consulting services, as well as sells hardware. The company serves beef and pork packers, organic producers and processors, and specialty retail chains. The company was formerly known as Integrated Management Information, Inc. and changed its name to Where Food Comes From, Inc. in December 2012. Where Food Comes From, Inc. was founded in 1996 and is based in Castle Rock, Colorado.