ExlService Holdings (NASDAQ: EXLS) and Ritchie Bros. Auctioneers (NYSE:RBA) are both mid-cap business services companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.
Institutional and Insider Ownership
94.7% of ExlService Holdings shares are held by institutional investors. Comparatively, 96.0% of Ritchie Bros. Auctioneers shares are held by institutional investors. 5.8% of ExlService Holdings shares are held by company insiders. Comparatively, 0.4% of Ritchie Bros. Auctioneers shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Ritchie Bros. Auctioneers pays an annual dividend of $0.68 per share and has a dividend yield of 2.4%. ExlService Holdings does not pay a dividend. Ritchie Bros. Auctioneers pays out 144.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ritchie Bros. Auctioneers has raised its dividend for 14 consecutive years.
This table compares ExlService Holdings and Ritchie Bros. Auctioneers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ritchie Bros. Auctioneers||8.96%||14.72%||6.14%|
Earnings and Valuation
This table compares ExlService Holdings and Ritchie Bros. Auctioneers’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|ExlService Holdings||$720.56 million||2.84||$101.10 million||$1.97||30.80|
|Ritchie Bros. Auctioneers||$566.33 million||5.33||$203.46 million||$0.47||59.98|
Ritchie Bros. Auctioneers has higher revenue, but lower earnings than ExlService Holdings. ExlService Holdings is trading at a lower price-to-earnings ratio than Ritchie Bros. Auctioneers, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
ExlService Holdings has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Ritchie Bros. Auctioneers has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.
This is a summary of current ratings and target prices for ExlService Holdings and Ritchie Bros. Auctioneers, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ritchie Bros. Auctioneers||2||5||4||0||2.18|
ExlService Holdings currently has a consensus target price of $59.82, indicating a potential downside of 1.42%. Ritchie Bros. Auctioneers has a consensus target price of $30.67, indicating a potential upside of 8.79%. Given Ritchie Bros. Auctioneers’ higher probable upside, analysts clearly believe Ritchie Bros. Auctioneers is more favorable than ExlService Holdings.
ExlService Holdings beats Ritchie Bros. Auctioneers on 9 of the 17 factors compared between the two stocks.
About ExlService Holdings
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.
About Ritchie Bros. Auctioneers
Ritchie Bros Auctioneers Inc is a Canada-based holding company. The Company is an industrial auctioneer and used equipment distributor, selling used equipment and other assets. Its segments include Core Auction, which is a network of auction locations that conduct live, unreserved auctions with both on-site and online bidding, and Other, which includes its EquipmentOne and Mascus International Holding B.V. (Mascus) online services. EquipmentOne is an online marketplace that equipment sellers can navigate independently. EquipmentOne facilitates the completion of sales through a settlement process managed by EquipmentOne that protects both the seller and the buyer. Mascus is an online equipment listing service for used heavy machinery and trucks. It offers subscriptions to equipment dealers, brokers, exporters and equipment manufacturers to list equipment available for sale at a listed price. The Company, through Mascus, provides online advertising services, business tools and solutions.
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