Financial Analysis: Ability (ABIL) versus USA Technologies (USAT)

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

Analyst Ratings

This is a summary of current ratings for Ability and USA Technologies, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ability 0 1 0 0 2.00
USA Technologies 0 0 2 0 3.00

Ability presently has a consensus price target of $1.30, indicating a potential upside of 69.01%. USA Technologies has a consensus price target of $7.25, indicating a potential upside of 38.10%. Given Ability’s higher possible upside, equities research analysts plainly believe Ability is more favorable than USA Technologies.

Profitability

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

Net Margins Return on Equity Return on Assets
Ability -109.96% -99.99% -27.90%
USA Technologies -1.78% -0.81% -0.56%

Earnings and Valuation

This table compares Ability and USA Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ability $10.84 million 1.83 -$8.63 million N/A N/A
USA Technologies $104.09 million 2.52 $5.74 million ($0.05) -104.98

USA Technologies has higher revenue and earnings than Ability.

Volatility & Risk

Ability has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500. Comparatively, USA Technologies has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Insider and Institutional Ownership

4.7% of Ability shares are owned by institutional investors. Comparatively, 35.4% of USA Technologies shares are owned by institutional investors. 4.4% of USA Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

USA Technologies beats Ability on 11 of the 12 factors compared between the two stocks.

About Ability

Ability Inc. is a holding company. The Company operates through its subsidiaries, Ability Computer & Software Industries Ltd. and Ability Security Systems Ltd., which provide interception, geolocation and cyber intelligence tools for security and intelligence agencies, military forces, law enforcement agencies and homeland security agencies around the world. The Company is engaged in off-air interception of voice, short message service (SMS), and data communication from both cellular and satellite communication networks, and deciphering solutions for both cellular and satellite communications. The Company’s product categories include Cellular Interception, Cellular Counter Interception, Satellite Interception, Geolocation, Cyber and Crime Prevention. Its Cellular Interception systems include Ultimate Interceptor (ULIN), IBIS, TouchDown, ACIS, AGIS-51 and 3G-Cat. Its Satellite Interception systems include IRIS, ATIS and SLIS.

About USA Technologies

USA Technologies, Inc. provides technology-enabled solutions and value-added services that facilitate electronic payment transactions within the unattended point of sale (POS) market. The Company is a provider in the small ticket, beverage and food vending industry and is also engaged in offering solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others. It has designed and marketed systems and solutions that facilitate electronic payment options, as well as telemetry and machine-to-machine (M2M) services, which include the ability to remotely monitor, control and report on the results of distributed assets containing its electronic payment solutions. The Company derives its revenues from license and transaction fees resulting from connections to, as well as services provided by, its ePort Connect service.

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