ExlService Holdings (NASDAQ: EXLS) and Information Services Group (NASDAQ:III) are both small-cap business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Risk & Volatility

ExlService Holdings has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, Information Services Group has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Profitability

This table compares ExlService Holdings and Information Services Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ExlService Holdings 9.53% 14.34% 11.04%
Information Services Group -3.46% -10.15% -2.66%

Institutional & Insider Ownership

94.9% of ExlService Holdings shares are owned by institutional investors. Comparatively, 41.9% of Information Services Group shares are owned by institutional investors. 5.8% of ExlService Holdings shares are owned by insiders. Comparatively, 12.0% of Information Services Group shares are owned 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.

Earnings and Valuation

This table compares ExlService Holdings and Information Services Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ExlService Holdings $720.56 million 2.60 $101.10 million $1.97 28.22
Information Services Group $240.81 million 0.67 $13.26 million ($0.22) -16.82

ExlService Holdings has higher revenue and earnings than Information Services Group. Information Services Group is trading at a lower price-to-earnings ratio than ExlService Holdings, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for ExlService Holdings and Information Services Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ExlService Holdings 1 3 6 0 2.50
Information Services Group 0 0 2 0 3.00

ExlService Holdings presently has a consensus target price of $59.40, indicating a potential upside of 6.85%. Information Services Group has a consensus target price of $6.50, indicating a potential upside of 75.68%. Given Information Services Group’s stronger consensus rating and higher possible upside, analysts clearly believe Information Services Group is more favorable than ExlService Holdings.

Summary

ExlService Holdings beats Information Services Group on 10 of the 13 factors compared between the two stocks.

About ExlService Holdings

ExlService Holdings, Inc. is an operations management and analytics company. The Company segments include Insurance; Healthcare; Travel, Transportation and Logistics; Finance and Accounting (F&A); Analytics, and All Other. The Insurance operating segment serves property and casualty insurance, life insurance, disability insurance, annuity and retirement services companies. The Healthcare operating segment serves healthcare payers and providers. The Travel, Transportation and Logistics operating segment primarily serves clients in the travel, transport and logistics industries. The F&A operating segment provides finance and accounting business process management (BPM) services across an array of F&A processes. The Analytics services focus on driving business outcomes for its customers by generating data-driven insights across all parts of its customers’ businesses. The All Other segment includes banking and financial services, utilities and consulting operating segments.

About Information Services Group

Information Services Group, Inc. is a technology insights, market intelligence and advisory services company. The Company operates in the segment of fact-based sourcing advisory services. It supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services with a focus on information technology, business process transformation, program management services and enterprise resource planning. It offers service lines, including research, consulting, managed services, network carrier services, robotic process automation (RPA), outsourcing advisory and provider services. It specializes in digital transformation services, including automation, cloud and data analytics; managed governance and risk services; network carrier services; technology strategy and operations design; change management, and technology research and analysis.

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