Critical Survey: QAD (QADA) versus Materialise (MTLS)

QAD (NASDAQ:QADA) and Materialise (NASDAQ:MTLS) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitability.

Volatility and Risk

QAD has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, Materialise has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for QAD and Materialise, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
QAD 0 0 3 0 3.00
Materialise 0 1 1 0 2.50

QAD currently has a consensus price target of $54.67, indicating a potential upside of 17.69%. Materialise has a consensus price target of $19.54, indicating a potential upside of 20.74%. Given Materialise’s higher probable upside, analysts clearly believe Materialise is more favorable than QAD.

Profitability

This table compares QAD and Materialise’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
QAD 0.10% 0.08% 0.03%
Materialise 1.61% 2.77% 1.05%

Dividends

QAD pays an annual dividend of $0.29 per share and has a dividend yield of 0.6%. Materialise does not pay a dividend. QAD pays out -61.7% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares QAD and Materialise’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
QAD $305.02 million 2.99 -$9.06 million ($0.47) -98.83
Materialise $218.16 million 3.51 $3.58 million $0.07 231.14

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

Institutional and Insider Ownership

44.4% of QAD shares are held by institutional investors. Comparatively, 22.9% of Materialise shares are held by institutional investors. 43.7% of QAD shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

QAD Company Profile

QAD Inc. provides enterprise software solutions for manufacturing companies in the automotive, life sciences, consumer products, food and beverage, high technology, and industrial products industries worldwide. The company offers QAD Enterprise Applications, an integrated suite of software applications, which support the core business processes. Its QAD Enterprise Applications include software solutions, such as QAD Financials to manage and control finance and accounting processes; QAD Customer Management for manufacturers to acquire new customers; QAD Manufacturing, which supports manufacturing business processes; QAD Automation Solutions that improve manufacturers' material transaction processing; QAD Demand and Supply Chain Planning that fulfills materials planning and logistics requirements; QAD Supply Chain Execution that offers tools to support inventory and warehouse management; and QAD Transportation Management to manage and optimize outside carriers for shipments. The company's QAD Enterprise Applications also comprise suites, such as QAD Service and Support that handles service calls, manages service queues, and organizes mobile field resources; QAD Enterprise Asset Management to manage, maintain, and install capital equipment; Action Centers with Embedded Analytics; and QAD Analytics that provides data to measure performance. It also offers QAD Enterprise Quality Management that provides quality management and regulatory compliance solutions; QAD Interoperability, which integrates QAD Enterprise Applications with other non-QAD core business applications; and QAD Internationalization, which supports companies that manufacture and distribute their products worldwide. In addition, it provides customer support, product updates, maintenance, and professional services. The company markets its products through direct and indirect sales channels; and distributors and sales agents. QAD Inc. was founded in 1979 and is headquartered in Santa Barbara, California.

Materialise Company Profile

Materialise NV provides additive manufacturing software and 3D printing services in Europe, the Americas, Africa, and the Asia-Pacific. The company's Materialise Software segment offers proprietary software through programs and platforms that enable and enhance the functionality of 3D printers and of 3D printing operations. Its software interfaces between various types of 3D printers; and various software applications and capturing technologies, including computer-aided design packages and 3D scanners. This segment serves 3D printing machine original equipment manufacturers; manufacturers in automotive, aerospace, consumer goods, and hearing aid industries; and 3D printing service bureaus through its sales force, Website, and third-party distributors. Its Materialise Medical segment provides medical software that allows medical-image based analysis and engineering, as well as patient-specific design of surgical devices and implants to research institutes, hospitals, and medical device companies; and clinical services. This segment has collaboration agreements with Zimmer Biomet Holdings, Inc.; Encore Medical, L.P.; DePuy Synthes Companies of Johnson & Johnson; Global Orthopaedic Technology Pty Ltd; Limacorporate Spa; Mathys AG; Howmedica Osteonics Corp.; and Corin Ltd. It serves medical device companies, hospitals, universities, and industrial companies through its direct sales force, Website, and picture archiving and communication system partners. The company's Materialise Manufacturing segment primarily offers 3D printing services to industrial and commercial customers. It provides design and engineering services, and rapid prototyping and additive manufacturing of production parts; and engineers and 3D prints fixtures that allow automobile manufacturers and their suppliers to enhance the quality control and efficiency of their manufacturing processes. The company was founded in 1990 and is headquartered in Leuven, Belgium.

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