Analyzing WageWorks (WAGE) & ExlService Holdings (EXLS)

ExlService Holdings (NASDAQ: EXLS) and WageWorks (NYSE:WAGE) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for ExlService Holdings and WageWorks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ExlService Holdings 1 3 5 0 2.44
WageWorks 0 1 5 0 2.83

ExlService Holdings presently has a consensus price target of $59.11, suggesting a potential upside of 6.58%. WageWorks has a consensus price target of $80.30, suggesting a potential upside of 37.85%. Given WageWorks’ stronger consensus rating and higher possible upside, analysts clearly believe WageWorks is more favorable than ExlService Holdings.

Insider & Institutional Ownership

94.4% of ExlService Holdings shares are owned by institutional investors. Comparatively, 98.5% of WageWorks shares are owned by institutional investors. 5.8% of ExlService Holdings shares are owned by insiders. Comparatively, 3.5% of WageWorks shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

ExlService Holdings has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, WageWorks has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Profitability

This table compares ExlService Holdings and WageWorks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ExlService Holdings 9.53% 14.34% 11.04%
WageWorks 9.60% 9.52% 3.30%

Earnings & Valuation

This table compares ExlService Holdings and WageWorks’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ExlService Holdings $720.56 million 2.60 $101.10 million $1.97 28.15
WageWorks $434.87 million 5.32 $81.87 million $1.09 53.44

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

Summary

ExlService Holdings beats WageWorks on 7 of the 13 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 WageWorks

WageWorks, Inc. is engaged in administering Consumer-Directed Benefits (CDBs). The Company administers CBDs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, Consolidated Omnibus Budget Reconciliation Act (COBRA) and other employee benefits. Its CDB programs assist employees and their families in saving money by using pre-tax dollars to pay for certain of their healthcare, dependent care and commuter expenses. Employers financially benefit from its programs through reduced payroll taxes. It provides operational support services to its clients and its cross-functional teams, including customer support and claims processing. It administers HSAs for employers that allow employee participants to invest funds to be used for qualified healthcare expenses.

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