Genpact Limited (NYSE: G) and Maximus (NYSE:MMS) are both mid-cap business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, risk, earnings, dividends, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Genpact Limited and Maximus, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genpact Limited 0 2 6 0 2.75
Maximus 0 7 0 0 2.00

Genpact Limited presently has a consensus target price of $32.29, suggesting a potential upside of 9.00%. Maximus has a consensus target price of $61.50, suggesting a potential downside of 5.52%. Given Genpact Limited’s stronger consensus rating and higher possible upside, equities analysts clearly believe Genpact Limited is more favorable than Maximus.

Profitability

This table compares Genpact Limited and Maximus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Genpact Limited 10.22% 23.33% 9.85%
Maximus 8.43% 25.08% 15.44%

Dividends

Genpact Limited pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Maximus pays an annual dividend of $0.18 per share and has a dividend yield of 0.3%. Genpact Limited pays out 18.0% of its earnings in the form of a dividend. Maximus pays out 5.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider & Institutional Ownership

92.2% of Genpact Limited shares are held by institutional investors. Comparatively, 97.2% of Maximus shares are held by institutional investors. 1.4% of Genpact Limited shares are held by insiders. Comparatively, 3.1% of Maximus shares are held 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.

Valuation & Earnings

This table compares Genpact Limited and Maximus’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Genpact Limited $2.62 billion 2.18 $438.33 million $1.33 22.27
Maximus $2.45 billion 1.72 $384.41 million $3.14 20.73

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

Volatility and Risk

Genpact Limited has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, Maximus has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Summary

Genpact Limited beats Maximus on 9 of the 16 factors compared between the two stocks.

Genpact Limited Company Profile

Genpact Limited is engaged in providing digitally powered business process management and services. The Company is also engaged in designing, transforming and running a combination of processes, as well as providing solutions that combine elements of its service offerings. The Company’s segments include Business process outsourcing and Information technology services. The Company offers various vertical activities, which include banking and financial services, capital markets, consumer product goods services, healthcare, infrastructure and manufacturing services, insurance and life sciences. In addition to these vertical activities, it also offers analytics and research, collections and customer services, consulting and transformation services, core industry operations services, enterprise application services, finance and accounting (F&A) services, information technology (IT) infrastructure management services, and supply chain and procurement services.

Maximus Company Profile

MAXIMUS, Inc. provides business process services (BPS) to government health and human services agencies. The Company operates through three segments: U.S. Federal Services, Health Services and Human Services. The U.S. Federal Services segment provides BPS and program management for large government programs, independent health review and appeals services for both the United States Federal Government, and state-based programs and technology solutions for civilian federal programs. The Health Services segment provides a range of BPS, as well as related consulting services, for state, provincial and national government programs. The Human Services segment provides national, state and local human services agencies with a range of BPS and related consulting services for welfare-to-work, child support, higher education and K-12 special education programs.

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