USA Technologies (USAT) versus VeriFone (PAY) Critical Comparison

USA Technologies (NASDAQ: USAT) and VeriFone (NYSE:PAY) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.

Analyst Ratings

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This is a breakdown of recent recommendations and price targets for USA Technologies and VeriFone, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
USA Technologies 0 0 4 0 3.00
VeriFone 1 10 3 0 2.14

USA Technologies presently has a consensus target price of $12.50, indicating a potential upside of 48.81%. VeriFone has a consensus target price of $20.80, indicating a potential upside of 37.11%. Given USA Technologies’ stronger consensus rating and higher possible upside, equities analysts plainly believe USA Technologies is more favorable than VeriFone.

Profitability

This table compares USA Technologies and VeriFone’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
USA Technologies -10.39% 2.18% 1.46%
VeriFone -8.09% 14.11% 4.70%

Institutional and Insider Ownership

56.1% of USA Technologies shares are owned by institutional investors. 4.4% of USA Technologies shares are owned by company insiders. Comparatively, 1.2% of VeriFone shares are owned 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.

Earnings and Valuation

This table compares USA Technologies and VeriFone’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
USA Technologies $104.09 million 4.33 -$1.85 million ($0.02) -420.00
VeriFone $1.87 billion 0.89 -$173.82 million $0.95 15.97

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

Risk and Volatility

USA Technologies has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500. Comparatively, VeriFone has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500.

Summary

USA Technologies beats VeriFone on 8 of the 14 factors compared between the two stocks.

About USA Technologies

USA Technologies, Inc. provides wireless networking, cashless transactions, asset monitoring, and other value-added services in the United States and internationally. It designs and markets systems and solutions that facilitate electronic payment options, as well as telemetry and machine-to-machine (M2M) services. The company's ePort Connect solution offers various POS options, card processing, wireless connectivity, customer/consumer, online sales reporting, M2M telemetry and DEX data transfer, over-the-air update capabilities, deployment planning, and value-added services, as well as planning, project management, installation support, marketing, and performance evaluation services. The company's products include ePort, a device that is used in self-service, unattended markets, such as vending, amusement and arcade, and various other kiosk applications, as well as facilitates cashless payments by capturing payment information and transmitting it to its network for authorization with the payment system. It primarily serves small ticket, and beverage and food vending industries, as well as unattended point of sale markets, including amusement, commercial laundry, kiosk, and other. USA Technologies, Inc. was founded in 1992 and is headquartered in Malvern, Pennsylvania.

About VeriFone

VeriFone Systems, Inc. offers payments and commerce solutions. The Company is engaged in designing, manufacturing, marketing and supplying a range of payment solutions and complementary services. It provides solutions and services for the retail point-of-sale (POS) that enable various forms of commerce. The Company’s segments include Verifone Systems and Verifone Services. The Verifone Systems segment delivers point of sale electronic payment devices that run the operating systems, security and encryption software, and certified payment software for both payments and commerce. The Verifone Services segment delivers device-related leasing and maintenance, payment transaction routing and reporting, and commerce based services, such as advertising on digital screens. The Company operates in various sectors, such as financial services, retail, petroleum, restaurant, hospitality, transportation and healthcare.

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