LegalZoom.com (NASDAQ:LZ) versus Clarivate (NYSE:CLVT) Critical Survey

LegalZoom.com (NASDAQ:LZ) and Clarivate (NYSE:CLVT) are both industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares LegalZoom.com and Clarivate’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	3.61%	32.88%	9.31%
Clarivate	-50.00%	9.69%	3.97%

Valuation and Earnings

This table compares LegalZoom.com and Clarivate”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LegalZoom.com	$660.73 million	2.24	$13.95 million	$0.13	65.85
Clarivate	$2.63 billion	1.48	-$911.20 million	($1.99)	-2.76

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

Institutional and Insider Ownership

82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 85.7% of Clarivate shares are held by institutional investors. 10.5% of LegalZoom.com shares are held by company insiders. Comparatively, 22.8% of Clarivate shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

LegalZoom.com has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Clarivate has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for LegalZoom.com and Clarivate, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	2	6	2	0	2.00
Clarivate	1	3	2	0	2.17

LegalZoom.com presently has a consensus target price of $8.81, suggesting a potential upside of 2.95%. Clarivate has a consensus target price of $7.10, suggesting a potential upside of 29.21%. Given Clarivate’s stronger consensus rating and higher possible upside, analysts plainly believe Clarivate is more favorable than LegalZoom.com.

Summary

LegalZoom.com beats Clarivate on 7 of the 13 factors compared between the two stocks.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.

About Clarivate

Clarivate Plc operates as an information services provider in the Americas, the Middle East, Africa, Europe, and the Asia Pacific. It operates through three segments: Academia & Government, Life Sciences & Healthcare, and Intellectual Property. The company offers Web of Science and InCites, that analyzes and explores the academic research landscape and manages research information; ProQuest One and Ebook Central that provides comprehensive content collections to institutions in a cost-effective manner; and Alma and Polaris, that manages academic resources and services, connect users, and support research publications. It also provides Patent and Trademark Renewals, that supports paralegal and admin tasks throughout the patent and trademark protection and maintenance process; CompuMark and Derwent, that supports critical decisions around patent and trademark protection, risk, and value creation throughout the innovation and brand lifecycle; IPFolio and Foundation IP that creates a structured environment for the protection and management of global patent and trademark assets. In addition, the company offers Cortellis Competitive Intelligence and Cortellis Drug Discovery Intelligence, that supports the development of new drugs and medical devices from discovery to clinical trials; Cortellis Regulatory Intelligence and OFF-X to monitor drug safety issues and adhere to regulatory protocols; Real World Data and Optimize that inform commercial launch strategy and set pricing for optimal reimbursement. It serves corporations, universities, law firms, government agencies, public libraries, and other professional services organizations. The company was formerly known as Clarivate Analytics Plc and changed its name to Clarivate Plc in May 2020. Clarivate Plc was founded in 1864 and is headquartered in London, the United Kingdom.