Square (SQ) versus ANSYS (ANSS) Critical Review


Square (NYSE:SQ) and ANSYS (NASDAQ:ANSS) are both large-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Volatility & Risk

Square has a beta of 4.24, suggesting that its stock price is 324% more volatile than the S&P 500. Comparatively, ANSYS has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Profitability

This table compares Square and ANSYS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Square -0.87% -1.11% -0.35%
ANSYS 27.00% 15.33% 12.39%

Valuation and Earnings

This table compares Square and ANSYS’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Square $2.21 billion 11.60 -$62.81 million ($0.10) -621.40
ANSYS $1.10 billion 11.42 $259.25 million $3.61 41.47

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Square and ANSYS, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Square 2 13 17 0 2.47
ANSYS 1 3 10 0 2.64

Square currently has a consensus target price of $86.38, suggesting a potential upside of 39.01%. ANSYS has a consensus target price of $175.40, suggesting a potential upside of 17.16%. Given Square’s higher possible upside, research analysts plainly believe Square is more favorable than ANSYS.

Institutional and Insider Ownership

48.1% of Square shares are held by institutional investors. Comparatively, 94.4% of ANSYS shares are held by institutional investors. 28.0% of Square shares are held by insiders. Comparatively, 1.1% of ANSYS shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

ANSYS beats Square on 7 of the 13 factors compared between the two stocks.

About Square

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions. It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts EMV® chip cards and Near Field Communication payments; Chip card reader, which accepts EMV® chip cards and enables swiped transactions of magnetic stripe cards; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions. The company also provides Square Point of Sale software; Cash App, which provides access to the financial system, allowing customers to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup and delivery, to their customers; and Square Capital that facilitates loans to sellers based on real-time payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.

About ANSYS

ANSYS, Inc. develops and markets engineering simulation software and services worldwide. The company offers ANSYS Workbench, a framework upon which the company’s engineering simulation technologies are built; ANSYS multiphysics software to simulate the interactions between structures, heat transfer, fluids, and electronics in a unified engineering simulation environment; and structural analysis product suite that provides simulation tools for product design and optimization. It also provides fluids product suite that enables modeling of fluid flow and other related physical phenomena; electronics product suite, which provides field simulation software for designing electronic and electromechanical products; and power analysis and optimization software suite. In addition, the company offers power analysis and optimization software suite that manages the power budget, power delivery integrity, and power-induced noise in an electronic design; SCADE product suite, a solution for embedded software simulation, code production, and automated certification; system simulation capability for the design of automated products; and high-performance computing product suite, which delivers cross-physics parallel processing capabilities for simulation software. Further, it provides Discovery product family for use in the simulation of product design; academic product suite with a portfolio of academic products based on associate, research, and teaching; ANSYS medini analyze, a suite for functional safety analysis; and ANSYS Fluent that automatically refines the mesh. The company serves engineers, designers, researchers, and students in the aerospace and defense, automotive, electronics, semiconductors, energy, materials and chemical processing, turbomachinery, consumer products, healthcare, and sports industries and academia. ANSYS, Inc. was founded in 1970 and is headquartered in Canonsburg, Pennsylvania.

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