Performant Financial (NASDAQ: PFMT) and Genpact (NYSE:G) are both business services companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Dividends

Genpact pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Performant Financial does not pay a dividend. Genpact pays out 17.4% of its earnings in the form of a dividend.

Insider and Institutional Ownership

54.5% of Performant Financial shares are held by institutional investors. Comparatively, 91.2% of Genpact shares are held by institutional investors. 33.6% of Performant Financial shares are held by insiders. Comparatively, 1.4% of Genpact 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 and Earnings

This table compares Performant Financial and Genpact’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Performant Financial $141.36 million 0.65 -$11.45 million ($0.50) -3.60
Genpact $2.57 billion 2.40 $269.68 million $1.38 23.15

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Performant Financial and Genpact, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Performant Financial 0 1 0 0 2.00
Genpact 0 2 6 0 2.75

Genpact has a consensus target price of $33.14, indicating a potential upside of 3.73%. Given Genpact’s stronger consensus rating and higher possible upside, analysts clearly believe Genpact is more favorable than Performant Financial.

Risk and Volatility

Performant Financial has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Genpact has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares Performant Financial and Genpact’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Performant Financial -19.27% -15.46% -7.34%
Genpact 10.18% 23.86% 9.71%

Summary

Genpact beats Performant Financial on 12 of the 15 factors compared between the two stocks.

Performant Financial Company Profile

Performant Financial Corporation (Performant) provides technology-enabled recovery and related analytics services in the United States. The Company’s services identify and recover delinquent or defaulted assets and improper payments for both government and private clients in a range of markets. The Company provides its services on an outsourced basis where the Company handles many or all aspects of its clients’ recovery processes. The Company uses its technology-enabled services platform to provide recovery and analytics services in a range of markets for the identification and recovery of student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. It provides recovery services to the government-supported student loan industry and its clients include the Department of Education and Guaranty Agencies, as well as private financial institutions. The Company provides recovery services related to improper payments in the healthcare market.

Genpact 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.

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