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

Insider & Institutional Ownership

99.2% of IHS Markit shares are owned by institutional investors. Comparatively, 85.7% of Donnelley Financial Solutions 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 hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for IHS Markit and Donnelley Financial Solutions, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IHS Markit 1 4 8 0 2.54
Donnelley Financial Solutions 0 3 1 0 2.25

IHS Markit currently has a consensus price target of $47.75, suggesting a potential upside of 6.90%. Donnelley Financial Solutions has a consensus price target of $23.33, suggesting a potential upside of 13.32%. Given Donnelley Financial Solutions’ higher possible upside, analysts plainly believe Donnelley Financial Solutions is more favorable than IHS Markit.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IHS Markit $2.73 billion 6.52 $152.80 million $0.95 47.02
Donnelley Financial Solutions $983.50 million 0.71 $59.10 million $0.99 20.80

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.

Profitability

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

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

Volatility and Risk

IHS Markit has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 2.77, indicating that its stock price is 177% more volatile than the S&P 500.

Summary

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

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.

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.

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