Analyzing LegalZoom.com (NASDAQ:LZ) & Alight (NYSE:ALIT)

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

Volatility and Risk

Alight has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500. Comparatively, LegalZoom.com has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Valuation and Earnings

This table compares Alight and LegalZoom.com”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alight	$2.26 billion	0.12	-$3.10 billion	($77.18)	-0.13
LegalZoom.com	$756.04 million	1.31	$15.43 million	$0.09	64.44

LegalZoom.com has lower revenue, but higher earnings than Alight. Alight 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 Alight and LegalZoom.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alight	-90.90%	16.05%	4.38%
LegalZoom.com	2.13%	15.83%	5.08%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Alight and LegalZoom.com, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alight	2	3	3	0	2.12
LegalZoom.com	3	5	0	0	1.62

Alight presently has a consensus target price of $49.33, suggesting a potential upside of 395.86%. LegalZoom.com has a consensus target price of $7.30, suggesting a potential upside of 25.86%. Given Alight’s stronger consensus rating and higher possible upside, research analysts plainly believe Alight is more favorable than LegalZoom.com.

Institutional and Insider Ownership

96.7% of Alight shares are held by institutional investors. Comparatively, 82.0% of LegalZoom.com shares are held by institutional investors. 2.1% of Alight shares are held by company insiders. Comparatively, 7.4% of LegalZoom.com shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

About Alight

Alight, Inc. provides cloud-based integrated digital human capital and business solutions worldwide. The company operates through two segments, Employer Solutions and Professional Services. The Employer Solutions segment offers employee wellbeing, integrated benefits administration, healthcare navigation, financial wellbeing, leave of absence management, retiree healthcare and payroll; and operates AI-led capabilities software. The Professional Services segment offers consulting offerings, such as cloud advisory, deployment, and optimization services for cloud platforms. The company provides Alight Worklife, an intuitive, cloud-based employee engagement platform. Its solutions enable employees to enrich their health, wealth, and wellbeing that helps organizations achieve a high-performance culture. Alight, Inc. was founded in 2020 and is based in Lincolnshire, Illinois.

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.