IHS Markit (INFO) and Model N (MODN) Financial Analysis

IHS Markit (NASDAQ:INFO) and Model N (NYSE:MODN) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Volatility & Risk

IHS Markit has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Model N has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Profitability

This table compares IHS Markit and Model N’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IHS Markit 14.57% 9.55% 5.07%
Model N -21.89% -61.62% -14.54%

Insider & Institutional Ownership

96.5% of IHS Markit shares are held by institutional investors. Comparatively, 68.7% of Model N shares are held by institutional investors. 2.7% of IHS Markit shares are held by company insiders. Comparatively, 18.9% of Model N shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for IHS Markit and Model N, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IHS Markit 1 4 10 0 2.60
Model N 0 2 5 0 2.71

IHS Markit currently has a consensus target price of $57.15, suggesting a potential upside of 9.81%. Model N has a consensus target price of $23.20, suggesting a potential upside of 53.24%. Given Model N’s stronger consensus rating and higher possible upside, analysts plainly believe Model N is more favorable than IHS Markit.

Earnings and Valuation

This table compares IHS Markit and Model N’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IHS Markit $3.60 billion 5.70 $416.90 million $1.68 30.98
Model N $131.17 million 3.61 -$39.54 million ($0.83) -18.24

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

Summary

IHS Markit beats Model N on 11 of the 14 factors compared between the two stocks.

About IHS Markit

IHS Markit Ltd. provides critical information, analytics, and solutions for various industries and markets that drive economies worldwide. The company's information, analytics, and solutions enhance operational efficiency and offer deep insights for customers in business, finance, and government. Its Resources segment provides upstream, midstream, downstream, and power/gas/coal/renewables services. This segment also offers data for manufacturing processes, as well as capital expenditure, cost, price, production, trade, demand, and capacity industry analysis and forecasts. The company's Transportation segment provides authoritative analysis, as well as sales and production forecasts for light vehicles, medium and heavy commercial vehicles, powertrains, components, and technology systems; and performance measurement tools and marketing solutions for car makers, dealers, and agencies. It also offers comprehensive data on ships, as well as monthly import and export statistics on approximately 90 countries; and specifications for military vehicles, naval vessels, and aircraft types. The company's Consolidated Markets & Solutions segment provides content and analytics on engineering and technical standards, codes, specifications, handbooks, reference books, journals, and other scientific and technical documents, as well as software-based engineering decision engines; components and devices, performance analytics, and end market intelligence for technology, media, and telecom industries; and economic and risk data, forecast, and analytic tools. Its Financial Services segment provides pricing and reference data, indices, valuation and trading services, trade processing, enterprise software, and managed services to traders, portfolio managers, risk managers, research professionals, and other financial markets participants, as well as operations, compliance, and enterprise data managers. IHS Markit Ltd. was founded in 1959 and is headquartered in London, the United Kingdom.

About Model N

Model N, Inc. provides revenue management cloud solutions for the life sciences, technology, and manufacturing companies. The company's cloud-based revenue management solutions include Revenue Cloud for Pharma, Revenue Cloud for Med Tech, Revenue Cloud for High Tech, and Revenue Cloud. It develops software applications, such as managed care and government pricing for life science companies; and channel incentives for technology companies. The company also offers revenue management processes, such as pricing, contracting, rebates, incentives, channel management, and regulatory compliance. In addition, Model N, Inc. provides implementation, managed, strategic, and customer support services. It primarily serves large and mid-sized organizations worldwide through its direct sales force. Model N, Inc. was founded in 1999 and is headquartered in San Mateo, California, with additional offices in the United States, India, and Switzerland.

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