StarTek (NYSE: SRT) and WNS (Holdings) Limited (NYSE:WNS) are both small-cap business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitabiliy, earnings, dividends and valuation.
Valuation & Earnings
This table compares StarTek and WNS (Holdings) Limited’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|StarTek||$306.82 million||0.70||$16.73 million||$0.12||112.25|
|WNS (Holdings) Limited||$602.55 million||2.83||$89.11 million||$0.72||47.31|
WNS (Holdings) Limited has higher revenue and earnings than StarTek. WNS (Holdings) Limited is trading at a lower price-to-earnings ratio than StarTek, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and price targets for StarTek and WNS (Holdings) Limited, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|WNS (Holdings) Limited||0||0||9||0||3.00|
StarTek currently has a consensus target price of $10.00, indicating a potential downside of 25.76%. WNS (Holdings) Limited has a consensus target price of $36.29, indicating a potential upside of 6.53%. Given WNS (Holdings) Limited’s higher possible upside, analysts clearly believe WNS (Holdings) Limited is more favorable than StarTek.
Insider and Institutional Ownership
45.4% of StarTek shares are owned by institutional investors. Comparatively, 88.5% of WNS (Holdings) Limited shares are owned by institutional investors. 17.8% of StarTek shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Volatility and Risk
StarTek has a beta of -0.07, indicating that its stock price is 107% less volatile than the S&P 500. Comparatively, WNS (Holdings) Limited has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.
This table compares StarTek and WNS (Holdings) Limited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|WNS (Holdings) Limited||6.27%||19.10%||13.53%|
WNS (Holdings) Limited beats StarTek on 11 of the 13 factors compared between the two stocks.
StarTek Company Profile
StarTek, Inc. is a customer engagement business process outsourcing (BPO) services provider, delivering customer care solutions. The Company operates through three segments: Domestic, Nearshore and Offshore. As of December 31, 2016, its Domestic segment included the operations of 13 facilities in the United States and one facility in Canada; its Offshore segment included the operations of four facilities in the Philippines, and its Nearshore segment included the operations of two facilities in Honduras and one facility in Jamaica. The Company’s service offerings include customer care, sales support, inbound sales, complex order processing, accounts receivable management, technical and product support, up-sell and cross-sell opportunities, customer intelligence analytics and other industry-specific processes. Its suite of order processing services ranges from enterprise level project management to direct-to-consumer order processing.
WNS (Holdings) Limited Company Profile
WNS (Holdings) Limited is a global provider of business process management (BPM) services. The Company offers data, voice, analytical and business transformation services. The Company’s segments include WNS Global BPM and WNS Auto Claims BPM. Its operating segments include travel, insurance, banking and financial services, healthcare, utilities, retail and consumer products groups, auto claims and others. The WNS Global BPM includes the Company’s business activities with the exception of WNS Auto Claims BPM. WNS Auto Claims BPM is the Company’s automobile claims management business. The Company focuses on various industry verticals, such as insurance; travel and leisure; diversified businesses, including manufacturing, retail, consumer packaged goods (CPG), media and entertainment, and telecommunication (telecom); utilities; consulting and professional services; banking and financial services; healthcare, and shipping and logistics.
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