Castlight Health, inc. (NYSE: CSLT) and Evolent Health (NYSE:EVH) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.

Profitability

This table compares Castlight Health, inc. and Evolent Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Castlight Health, inc. -42.54% -36.30% -24.42%
Evolent Health -17.57% -6.44% -5.13%

Analyst Recommendations

This is a summary of current ratings and target prices for Castlight Health, inc. and Evolent Health, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Castlight Health, inc. 1 4 2 0 2.14
Evolent Health 0 0 11 1 3.08

Castlight Health, inc. currently has a consensus target price of $4.63, suggesting a potential upside of 12.80%. Evolent Health has a consensus target price of $30.33, suggesting a potential upside of 69.93%. Given Evolent Health’s stronger consensus rating and higher possible upside, analysts clearly believe Evolent Health is more favorable than Castlight Health, inc..

Earnings and Valuation

This table compares Castlight Health, inc. and Evolent Health’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Castlight Health, inc. $115.24 million 4.69 -$48.77 million ($0.45) -9.11
Evolent Health $361.53 million 3.25 -$51.15 million ($1.21) -14.75

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

Insider and Institutional Ownership

41.3% of Castlight Health, inc. shares are held by institutional investors. Comparatively, 82.5% of Evolent Health shares are held by institutional investors. 37.4% of Castlight Health, inc. shares are held by insiders. Comparatively, 8.8% of Evolent Health shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

Castlight Health, inc. has a beta of 1.66, suggesting that its share price is 66% more volatile than the S&P 500. Comparatively, Evolent Health has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500.

Summary

Evolent Health beats Castlight Health, inc. on 9 of the 14 factors compared between the two stocks.

About Castlight Health, inc.

Castlight Health, Inc. offers a health benefits platform that engages employees to make healthcare decisions, and enables employers to communicate and measure their benefit programs. The Company operates through cloud-based products segment. Its technology offering aggregates data and applies analytics to make healthcare data transparent. Its products deliver employee engagement and enable employers to integrate benefit programs into a single platform available to employees and their families. Its health benefits platform engages external data and its substantial user base to provide a single, end-to-end solution that engages employees through personalized and relevant communications. Its offering provides employers the opportunity to communicate, measure, and get value out of their benefits and programs on a real-time basis. It offers cross-sell products, such as Castlight Action, Castlight Pharmacy, Castlight Dental, Castlight Elevate, Castlight Protect and Castlight Rewards.

About Evolent Health

Evolent Health, Inc. is engaged in healthcare delivery and payment. The Company supports health systems and physician organizations in their migration toward value-based care and population health management. The Company provides an end-to-end, technology-enabled services platform for providers. The Company’s platform, powered by its technology, processes and integrated services, enables providers to migrate their economic orientation from fee-for-service (FFS) reimbursement to payment models that reward value-based payment models. The Company’s services include providing its customers, with a population management platform, integrated data and analytics capabilities, pharmacy benefit management (PBM) services and comprehensive health plan administration services. Its value-based operations are empowered and supported by Identifi. Identifi is the Company’s technology platform that aggregates and analyzes data, manages care workflows and engages patients.

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