Critical Review: Servicemaster Global (SERV) versus ExlService (EXLS)

Servicemaster Global (NYSE: SERV) and ExlService (NASDAQ:EXLS) are both construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Servicemaster Global and ExlService, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Servicemaster Global 2 2 8 0 2.50
ExlService 1 4 6 0 2.45

Servicemaster Global presently has a consensus price target of $50.45, suggesting a potential downside of 1.92%. ExlService has a consensus price target of $61.82, suggesting a potential upside of 6.25%. Given ExlService’s higher probable upside, analysts clearly believe ExlService is more favorable than Servicemaster Global.

Risk and Volatility

Servicemaster Global has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, ExlService has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Institutional & Insider Ownership

91.5% of ExlService shares are held by institutional investors. 1.2% of Servicemaster Global shares are held by insiders. Comparatively, 5.8% of ExlService 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 Servicemaster Global and ExlService’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Servicemaster Global $2.75 billion 2.53 $155.00 million $1.74 29.56
ExlService $685.99 million 2.88 $61.73 million $2.11 27.57

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

Profitability

This table compares Servicemaster Global and ExlService’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Servicemaster Global 8.16% 40.22% 5.42%
ExlService 9.94% 14.81% 11.40%

Summary

ExlService beats Servicemaster Global on 8 of the 14 factors compared between the two stocks.

Servicemaster Global Company Profile

ServiceMaster Global Holdings, Inc. is a provider of essential residential and commercial services. The Company operates through three segments: Terminix, American Home Shield and the Franchise Services Group. Its portfolio of brands includes Terminix, American Home Shield, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. The Terminix segment provides termite and pest control services in the United States. The American Home Shield segment provides home warranty plans that cover the repair or replacement of components of up to 21 household systems and appliances, including electrical, plumbing, central heating and air conditioning (HVAC) systems, dishwashers and ovens/cook tops. The Franchise Services Group segment consists of the ServiceMaster Restore (disaster restoration), ServiceMaster Clean (janitorial), Merry Maids (residential cleaning), Furniture Medic (cabinet and wood furniture repair) and AmeriSpec (home inspection) businesses.

ExlService Company Profile

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.

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