Donnelley Financial Solutions (NYSE: DFIN) and IHS Markit (NASDAQ:INFO) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.

Profitability

This table compares Donnelley Financial Solutions and IHS Markit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Donnelley Financial Solutions 3.26% 32.44% 4.78%
IHS Markit 11.35% 8.79% 4.89%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Donnelley Financial Solutions and IHS Markit, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donnelley Financial Solutions 0 3 1 0 2.25
IHS Markit 1 5 7 0 2.46

Donnelley Financial Solutions currently has a consensus target price of $23.33, suggesting a potential upside of 15.34%. IHS Markit has a consensus target price of $47.75, suggesting a potential upside of 9.95%. Given Donnelley Financial Solutions’ higher possible upside, equities research analysts plainly believe Donnelley Financial Solutions is more favorable than IHS Markit.

Risk and Volatility

Donnelley Financial Solutions has a beta of 3.17, indicating that its stock price is 217% more volatile than the S&P 500. Comparatively, IHS Markit has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Valuation & Earnings

This table compares Donnelley Financial Solutions and IHS Markit’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Donnelley Financial Solutions $983.50 million 0.69 $59.10 million $0.99 20.43
IHS Markit $2.73 billion 6.33 $152.80 million $0.96 45.24

IHS Markit has higher revenue and earnings than Donnelley Financial Solutions. Donnelley Financial Solutions is trading at a lower price-to-earnings ratio than IHS Markit, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

87.4% of Donnelley Financial Solutions shares are owned by institutional investors. Comparatively, 98.7% of IHS Markit shares are owned by institutional investors. 1.6% of Donnelley Financial Solutions shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

IHS Markit beats Donnelley Financial Solutions on 9 of the 14 factors compared between the two stocks.

Donnelley Financial Solutions Company Profile

Donnelley Financial Solutions, Inc. is a financial communications services company that supports global capital markets compliance and transaction needs for its corporate clients and their advisors (such as law firms and investment bankers), and global investment markets compliance and analytics needs for mutual fund companies, variable annuity providers and broker/dealers. The Company provides content management, multi-channel content distribution, data management and analytics services, collaborative workflow and business reporting tools, and translations and other language services in support of its clients’ communications requirements. The Company operates in two business segments: United States and International. The United States segment consists of three reporting units: capital markets, investment markets, and language solutions and other. The International segment includes its operations in Asia, Europe, Latin America and Canada.

IHS Markit Company Profile

IHS Markit Ltd., formerly Markit Ltd., is a provider of critical information and analytics for the major industries, financial markets and governments. The Company operates through four segments: Resources, Transportation, Consolidated Markets & Solutions (CMS) and Financial Services. The Resources segment includes its energy and chemicals product offerings. Its energy offerings are focused on upstream, midstream, downstream and power/gas/coal/renewables (PGCR) services. The Transportation segment includes its aerospace, defense and security (AD&S); automotive, and maritime and trade (M&T) product offerings. The CMS segment includes its product design; technology, media and telecommunication, and economics and country risk (ECR) product offerings. The Company’s Financial Services segment provides pricing and reference data, indices, valuation and trading services, trade processing, enterprise software and managed services.

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