Analyzing Acacia Research (ACTG) & Liberty Tax (TAX)

Acacia Research (NASDAQ: ACTG) and Liberty Tax (NASDAQ:TAX) are both small-cap business services companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, risk, dividends, institutional ownership and profitability.

Institutional and Insider Ownership

61.7% of Acacia Research shares are held by institutional investors. Comparatively, 48.8% of Liberty Tax shares are held by institutional investors. 11.0% of Acacia Research shares are held by company insiders. Comparatively, 15.3% of Liberty Tax shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Acacia Research has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Liberty Tax has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Acacia Research and Liberty Tax, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acacia Research 1 0 1 0 2.00
Liberty Tax 0 1 0 0 2.00

Acacia Research presently has a consensus price target of $6.50, suggesting a potential upside of 54.76%. Given Acacia Research’s higher probable upside, analysts clearly believe Acacia Research is more favorable than Liberty Tax.

Dividends

Liberty Tax pays an annual dividend of $0.64 per share and has a dividend yield of 7.8%. Acacia Research does not pay a dividend. Liberty Tax pays out 55.7% of its earnings in the form of a dividend.

Profitability

This table compares Acacia Research and Liberty Tax’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acacia Research 1.66% 42.95% 39.10%
Liberty Tax N/A N/A N/A

Valuation & Earnings

This table compares Acacia Research and Liberty Tax’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acacia Research $65.40 million 3.25 $22.18 million $2.97 1.41
Liberty Tax $173.99 million 0.61 $13.01 million $1.15 7.17

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

Summary

Acacia Research beats Liberty Tax on 11 of the 15 factors compared between the two stocks.

Acacia Research Company Profile

Acacia Research Corporation, together with its subsidiaries, invests in, licenses, and enforces patented technologies. It assists patent owners with the prosecution and development of their patent portfolios; protection of their patented inventions from unauthorized use; generation of licensing revenue from users of their patented technologies; and enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. The company owns or controls the rights to various patent portfolios, which include U.S. patents and foreign counterparts covering technologies used in a range of industries. It has executed approximately 1,550 license agreements and 193 patent portfolio licensing and enforcement programs. Acacia Research Corporation was founded in 1992 and is headquartered in Newport Beach, California.

Liberty Tax Company Profile

Liberty Tax, Inc., together with its subsidiaries, provides tax preparation services and solutions in the United States and Canada. The company also facilitates refund-based tax settlement financial products, such as refund transfer products, refund-based loans, and personal income tax refund discounting, as well as provides an online digital Do-It-Yourself tax program in the United States. Its customers include taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services. Liberty Tax, Inc. offers its products and services through a network of company-owned offices and franchised locations under the Liberty Tax, Liberty Tax Service, Liberty Income Tax, Liberty Canada, and SiempreTax+ brand names. The company was formerly known as JTH Holding, Inc. and changed its name to Liberty Tax, Inc. in July 2014. Liberty Tax, Inc. was founded in 1996 and is headquartered in Virginia Beach, Virginia.

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