Critical Analysis: CS Disco (NYSE:LAW) and Xperi (NYSE:XPER)

Xperi (NYSE:XPER) and CS Disco (NYSE:LAW) are both small-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Xperi and CS Disco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xperi	1	1	2	0	2.25
CS Disco	1	1	2	0	2.25

Xperi currently has a consensus price target of $11.00, suggesting a potential upside of 112.97%. CS Disco has a consensus price target of $8.00, suggesting a potential upside of 58.57%. Given Xperi’s higher probable upside, research analysts clearly believe Xperi is more favorable than CS Disco.

Institutional & Insider Ownership

94.3% of Xperi shares are held by institutional investors. Comparatively, 58.0% of CS Disco shares are held by institutional investors. 3.2% of Xperi shares are held by company insiders. Comparatively, 16.8% of CS Disco shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Xperi and CS Disco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Xperi	-7.12%	4.04%	2.72%
CS Disco	-24.20%	-26.58%	-19.89%

Volatility & Risk

Xperi has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500. Comparatively, CS Disco has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500.

Valuation & Earnings

This table compares Xperi and CS Disco”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xperi	$448.11 million	0.56	-$56.34 million	($0.70)	-7.38
CS Disco	$167.12 million	1.96	-$44.37 million	($0.63)	-8.01

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

Summary

Xperi beats CS Disco on 7 of the 12 factors compared between the two stocks.

About Xperi

Xperi Holding Corporation, together with its subsidiaries, operates as a consumer and entertainment product/solutions licensing company worldwide. It operates through two segments, Product, and Intellectual Property Licensing. The company invents, develops, and delivers various technologies. It licenses audio, digital radio, imaging, edge-based machine learning, and multi-channel video user experience solutions to consumer electronics customers, automotive manufacturers, or supply chain partners. The company also provides licensing to multichannel video programming distributors, OTT video service providers, consumer electronics manufacturers, social media, and other new media companies in media industry; and memory, sensors, RF component, and foundry companies in semiconductor industry. It provides its technologies under the DTS, HD Radio, IMAX Enhanced, Invensas, TiVo, and Perceive brands. The company is headquartered in San Jose, California.

About CS Disco

CS Disco, Inc. provides cloud-native and artificial intelligence-powered legal solutions for legal hold, legal request, ediscovery, legal document review, and case management in the United States and internationally. It offers DISCO Request, a solution that automates response compliance for legal requests; and DISCO Ediscovery, a solution that automates the ediscovery process and saves legal departments from manual tasks associated with collecting, processing, enriching, searching, reviewing, analyzing, producing, and using enterprise data that is at issue in legal matters. The company also provides DISCO Hold, a solution that automates manual work to preserve data, notify custodians, track holds with a defensible audit trail, and collect data when ready; DISCO Review, an AI-powered document review solution that delivers legal document reviews; and DISCO Case Builder, a solution that allows legal professionals to collaborate with teams to build a compelling case by offering a single place to search, organize, and review witness testimony and other legal data. The company's solutions are used in various legal matters comprising litigation, investigation, compliance, and diligence. It serves enterprises, law firms, legal services providers, and governments. CS Disco, Inc. was founded in 2012 and is headquartered in Austin, Texas.