Critical Survey: Gartner (NYSE:IT) & LegalZoom.com (NASDAQ:LZ)

LegalZoom.com (NASDAQ:LZ) and Gartner (NYSE:IT) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.

Valuation and Earnings

This table compares LegalZoom.com and Gartner”s top-line 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	1.08	$15.43 million	$0.12	41.29
Gartner	$6.50 billion	1.87	$729.23 million	$14.03	13.71

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

Profitability

This table compares LegalZoom.com and Gartner’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	2.56%	23.63%	7.07%
Gartner	14.81%	2,287.71%	13.78%

Analyst Ratings

This is a summary of recent ratings and price targets for LegalZoom.com and Gartner, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	3	5	0	0	1.62
Gartner	2	8	0	0	1.80

LegalZoom.com currently has a consensus target price of $6.12, indicating a potential upside of 23.61%. Gartner has a consensus target price of $206.20, indicating a potential upside of 7.16%. Given LegalZoom.com’s higher probable upside, equities research analysts clearly believe LegalZoom.com is more favorable than Gartner.

Institutional and Insider Ownership

82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 91.5% of Gartner shares are held by institutional investors. 7.4% of LegalZoom.com shares are held by insiders. Comparatively, 2.6% of Gartner shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

LegalZoom.com has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Gartner has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Summary

Gartner beats LegalZoom.com on 9 of the 13 factors compared between the two stocks.

About LegalZoom.com

LegalZoom.com, Inc. provides online legal and compliance services to individuals and small businesses. Its platform helps customers complete common legal tasks through guided tools and access to professional services. Services include forming limited liability companies and corporations, registered agent services, business compliance support, trademark applications, and personal legal documents such as wills and estate plans. The company also offers access to attorneys for legal advice and assistance.

About Gartner

Gartner, Inc. is a global research and advisory company that provides business and technology leaders with insights to support decision-making. Its research covers areas such as information technology, digital transformation, cybersecurity, finance, human resources, and supply chain management. The company offers research subscriptions, advisory services, consulting, and conferences. Its research includes tools and analysis such as Magic Quadrants and Hype Cycles, which help organizations assess markets, technologies, and potential vendors.