Critical Contrast: Information Services Group (III) vs. Nelnet (NNI)

Information Services Group (NASDAQ: III) and Nelnet (NYSE:NNI) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Profitability

This table compares Information Services Group and Nelnet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Information Services Group -3.46% -10.15% -2.66%
Nelnet 20.19% 9.65% 0.75%

Dividends

Nelnet pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Information Services Group does not pay a dividend. Nelnet pays out 9.1% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Information Services Group and Nelnet, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Information Services Group 0 0 2 0 3.00
Nelnet 0 2 0 0 2.00

Information Services Group presently has a consensus target price of $6.50, suggesting a potential upside of 57.38%. Nelnet has a consensus target price of $50.00, suggesting a potential upside of 0.14%. Given Information Services Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Information Services Group is more favorable than Nelnet.

Insider and Institutional Ownership

41.9% of Information Services Group shares are owned by institutional investors. Comparatively, 40.9% of Nelnet shares are owned by institutional investors. 12.0% of Information Services Group shares are owned by company insiders. Comparatively, 45.4% of Nelnet shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Information Services Group has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Nelnet has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Earnings and Valuation

This table compares Information Services Group and Nelnet’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Information Services Group $240.81 million 0.74 $13.26 million ($0.22) -18.77
Nelnet $861.56 million 1.74 $185.19 million $6.16 8.11

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

Summary

Nelnet beats Information Services Group on 10 of the 15 factors compared between the two stocks.

About Information Services Group

Information Services Group, Inc. is a technology insights, market intelligence and advisory services company. The Company operates in the segment of fact-based sourcing advisory services. It supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services with a focus on information technology, business process transformation, program management services and enterprise resource planning. It offers service lines, including research, consulting, managed services, network carrier services, robotic process automation (RPA), outsourcing advisory and provider services. It specializes in digital transformation services, including automation, cloud and data analytics; managed governance and risk services; network carrier services; technology strategy and operations design; change management, and technology research and analysis.

About Nelnet

Nelnet, Inc. focuses on delivering education-related products and services and student loan asset management. The Company is engaged in student loan servicing, tuition payment processing and school information systems, and communications. The Company’s segments include Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce, Communications, Asset Generation and Management, and Corporate and Other Activities. The Company earns fee-based revenue through its Loan Systems and Servicing, Tuition Payment Processing, and Communications operating segments. In addition, the Company earns interest income on its student loan portfolio in its Asset Generation and Management operating segment. Corporate and Other Activities include real estate and other investments. The Company, through Allo Communications LLC, is engaged in the sale of advanced telecommunication services, including Internet, broadband, telephone, and television services.

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