CSG Systems International (NASDAQ:CSGS) and PDF Solutions (NASDAQ:PDFS) Critical Review

CSG Systems International (NASDAQ:CSGS) and PDF Solutions (NASDAQ:PDFS) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Profitability

This table compares CSG Systems International and PDF Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CSG Systems International	6.78%	40.48%	8.09%
PDF Solutions	0.44%	4.22%	2.98%

Analyst Recommendations

This is a breakdown of recent recommendations for CSG Systems International and PDF Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CSG Systems International	0	2	6	1	2.89
PDF Solutions	0	1	2	0	2.67

CSG Systems International currently has a consensus price target of $71.2857, suggesting a potential upside of 10.47%. PDF Solutions has a consensus price target of $33.3333, suggesting a potential upside of 68.95%. Given PDF Solutions’ higher possible upside, analysts clearly believe PDF Solutions is more favorable than CSG Systems International.

Institutional & Insider Ownership

91.1% of CSG Systems International shares are owned by institutional investors. Comparatively, 79.5% of PDF Solutions shares are owned by institutional investors. 3.1% of CSG Systems International shares are owned by insiders. Comparatively, 11.1% of PDF Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares CSG Systems International and PDF Solutions”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CSG Systems International	$1.20 billion	1.55	$86.85 million	$2.89	22.33
PDF Solutions	$179.46 million	4.34	$4.06 million	$0.03	657.67

CSG Systems International has higher revenue and earnings than PDF Solutions. CSG Systems International is trading at a lower price-to-earnings ratio than PDF Solutions, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

CSG Systems International has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, PDF Solutions has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500.

Summary

CSG Systems International beats PDF Solutions on 10 of the 15 factors compared between the two stocks.

About CSG Systems International

CSG Systems International, Inc., together with its subsidiaries, provides revenue management and digital monetization, customer experience, and payment solutions primarily to the communications industry in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers Advanced Convergent Platform, a private SaaS platform; and related solutions, including service technician management, analytics, electronic bill presentment, etc. The company also provides a public SaaS-based revenue management and payments platform. In addition, it offers managed services; and professional services to implement, configure, and maintain its solutions, as well as licenses various solutions, such as mediation, partner management, rating, and charging. Further, the company provides operational services, including infrastructure management comprised of hardware, application, and environmental management; application configuration management, such as configuration development, release, and deployment; and business operations management, which includes event processing, revenue management, and settlement. It serves retail, financial services, healthcare, insurance, and government entities. The company was incorporated in 1994 and is headquartered in Englewood, Colorado.

About PDF Solutions

PDF Solutions, Inc. provides proprietary software and physical intellectual property products for integrated circuit designs, electrical measurement hardware tools, proven methodologies, and professional services in the United States, China, Japan, and internationally. The company offers Exensio software products, such as Manufacturing Analytics that store collected data in a common environment with a consistent view for enabling product engineers to identify and analyze production yield, performance, reliability, and other issues; Process Control that provides failure detection and classification capabilities for monitoring, alarming, and controlling manufacturing tool sets; Test Operations that offer data collection and analysis capabilities; and Assembly Operations that provide device manufacturers with the capability to link assembly and packaging data, including fabrication and characterization data over the product life cycle. It also provides Design-For-Inspection (DFI) systems, such as DFI On-Chip Instruments; eProbe Non-Contact E-Beam Tool; and Characterization Vehicle (CV) system, which includes CV Test Chips and pdFasTest Electrical Testers, as well as Exensio characterization software, designed to analyze the measurements collected using the eProbe tool. In addition, the company offers Cimetrix software products that enables equipment manufacturers to provide industry standard interfaces on their products; and software-as-a-service, software related services, and characterization services. It sells its technologies and services through direct sales force, service teams, and strategic alliances to integrated device manufacturers, fabless semiconductor companies, foundries, equipment manufacturers, electronics manufacturing suppliers, original device manufacturers, out-sourced semiconductor assembly and test, and system houses. PDF Solutions, Inc. was founded in 1991 and is headquartered in Santa Clara, California.