Contrasting LegalZoom.com (NASDAQ:LZ) and TaskUs (NASDAQ:TASK)

LegalZoom.com (NASDAQ:LZ) and TaskUs (NASDAQ:TASK) are both small-cap industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	2	6	2	0	2.00
TaskUs	1	3	4	0	2.38

LegalZoom.com presently has a consensus target price of $9.06, suggesting a potential upside of 4.53%. TaskUs has a consensus target price of $17.00, suggesting a potential upside of 18.30%. Given TaskUs’ stronger consensus rating and higher probable upside, analysts clearly believe TaskUs is more favorable than LegalZoom.com.

Institutional & Insider Ownership

82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 44.6% of TaskUs shares are held by institutional investors. 10.5% of LegalZoom.com shares are held by insiders. Comparatively, 29.3% of TaskUs shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LegalZoom.com and TaskUs’ 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%
TaskUs	5.58%	17.73%	9.17%

Valuation & Earnings

This table compares LegalZoom.com and TaskUs”s 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	2.27	$13.95 million	$0.13	66.70
TaskUs	$924.36 million	1.39	$45.69 million	$0.59	24.36

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

Volatility & Risk

LegalZoom.com has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500. Comparatively, TaskUs has a beta of 2.21, suggesting that its share price is 121% more volatile than the S&P 500.

Summary

TaskUs beats LegalZoom.com on 9 of the 14 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 TaskUs

TaskUs, Inc. provides digital outsourcing services for companies in Philippines, the United States, India, and internationally. It offers digital customer experience that consists of omni-channel customer care services primarily delivered through non-voice digital channels; and other solutions, including experience and customer care services for new product or market launches, and customer acquisition solutions. The company also provides trust and safety solutions, such as review and disposition of user and advertiser generated visual, text, and audio content, which include removal or labeling of policy violating, and offensive or misleading content, as well as risk management, compliance, identity management, and fraud services; and artificial intelligence (AI) solutions that consist of data labeling, annotation, context relevance, and transcription services for training and tuning machine learning algorithms that enables to develop AI systems. It serves clients in various industry segments comprising e-commerce, FinTech, food delivery and ride sharing, gaming, technology, HealthTech, social media, and streaming media. The company was formerly known as TU TopCo, Inc. and changed its name to TaskUs, Inc. in December 2020. TaskUs, Inc. was founded in 2008 and is headquartered in New Braunfels, Texas.