Head to Head Analysis: Stem (NYSE:STEM) & ExlService (NASDAQ:EXLS)

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

Insider and Institutional Ownership

92.9% of ExlService shares are owned by institutional investors. Comparatively, 61.6% of Stem shares are owned by institutional investors. 4.0% of ExlService shares are owned by company insiders. Comparatively, 10.2% of Stem shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ExlService	11.91%	25.60%	15.03%
Stem	62.20%	N/A	-21.71%

Risk and Volatility

ExlService has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Stem has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for ExlService and Stem, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ExlService	0	1	4	0	2.80
Stem	1	5	0	0	1.83

ExlService presently has a consensus target price of $53.00, indicating a potential upside of 25.24%. Stem has a consensus target price of $17.60, indicating a potential downside of 5.55%. Given ExlService’s stronger consensus rating and higher probable upside, equities analysts clearly believe ExlService is more favorable than Stem.

Earnings & Valuation

This table compares ExlService and Stem”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ExlService	$2.03 billion	3.31	$198.30 million	$1.47	28.79
Stem	$144.58 million	1.08	-$854.01 million	($13.63)	-1.37

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

Summary

ExlService beats Stem on 11 of the 14 factors compared between the two stocks.

About ExlService

ExlService Holdings, Inc. operates as a data analytics, and digital operations and solutions company in the United States and internationally. The company operates through Insurance, Healthcare, Analytics, and Emerging Business segments. It also provides digital operations and solutions and analytics-driven services, such as claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business acquisition, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey, and customer service using digital technology, artificial intelligence, machine learning, and advanced automation; digital customer acquisition services using a software-as-a-service delivery model through LifePRO and LISS platforms; subrogation services; and Subrosource software platform, an end-to-end subrogation platform. In addition, the company offers health care services related to care management, utilization management, disease management, payment integrity, revenue optimization, and customer engagement. Further, it provides financial planning and analysis, management reporting, forecasting and decision support, data management, regulatory reporting and risk, and compliance services; reservations, customer, and fulfilment services; freight billing, collections, claims management, freight audit, freight scheduling, supply chain management, and revenue assurance services; residential mortgage lending, title verification and validation, retail banking and credit cards, trust verification, commercial banking, and investment management; merchandising, pricing, and demand forecasting; and digital operations and solutions. The company offers predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management. ExlService Holdings, Inc. was founded in 1999 and is headquartered in New York, New York.

About Stem

Stem, Inc. operates as a digitally connected, intelligent, and renewable energy storage network provider worldwide. The company offers energy storage hardware sourced from original equipment manufacturers (OEMs); edge hardware to aid in the collection of site data and real-time operation and control of the site and other optional equipment; and Athena, a software platform, which offers battery hardware and software-enabled services to operate the energy storage systems. It serves commercial and industrial enterprises, independent power producers, renewable project developers, and utilities and grid operators. The company was incorporated in 2009 and is headquartered in San Francisco, California.