Head-To-Head Survey: ExlService (NASDAQ:EXLS) and Advisory Board (ABCO)

Advisory Board (NASDAQ: ABCO) and ExlService (NASDAQ:EXLS) are both mid-cap industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Advisory Board 9.24% 12.31% 3.33%
ExlService 9.94% 14.81% 11.40%

Volatility & Risk

Advisory Board has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, ExlService has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.

Institutional and Insider Ownership

95.5% of Advisory Board shares are held by institutional investors. Comparatively, 95.7% of ExlService shares are held by institutional investors. 4.7% of Advisory Board shares are held by insiders. Comparatively, 5.8% of ExlService shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Advisory Board and ExlService, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advisory Board 0 11 3 0 2.21
ExlService 1 4 6 0 2.45

Advisory Board presently has a consensus price target of $51.44, indicating a potential downside of 4.44%. ExlService has a consensus price target of $61.82, indicating a potential upside of 2.04%. Given ExlService’s stronger consensus rating and higher possible upside, analysts clearly believe ExlService is more favorable than Advisory Board.

Earnings and Valuation

This table compares Advisory Board and ExlService’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Advisory Board $803.42 million 2.73 $91.23 million $1.74 30.94
ExlService $685.99 million 3.00 $61.73 million $2.11 28.71

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

Summary

ExlService beats Advisory Board on 10 of the 14 factors compared between the two stocks.

About Advisory Board

The Advisory Board Company is a provider of software and solutions to the healthcare and higher education industries. The Company offers subscription-based membership programs, software and data-enabled services. All of its programs are rooted in best practices and extends across four areas, including Best practices research, Technology, Data-enabled services and Consulting services. The best practices research and insight programs provide the foundation for all of its other programs. The Company offers technology analytics programs anchored by cloud-based software applications that surface performance improvement opportunities to accelerate progress. Through its consulting services, the Company provides on-the-ground support for performance improvement initiatives, as well as best practice professional management of areas of the hospital or medical group. The Company’s data-enabled services are primarily focused in the area of enrollment management.

About ExlService

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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