International Business Machines (NYSE:IBM) and ServiceSource International (NASDAQ:SREV) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.
Institutional and Insider Ownership
55.7% of International Business Machines shares are held by institutional investors. Comparatively, 66.8% of ServiceSource International shares are held by institutional investors. 0.2% of International Business Machines shares are held by company insiders. Comparatively, 9.5% of ServiceSource International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Volatility and Risk
International Business Machines has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, ServiceSource International has a beta of 2, suggesting that its stock price is 100% more volatile than the S&P 500.
Profitability
This table compares International Business Machines and ServiceSource International's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
International Business Machines | 10.53% | 48.69% | 6.59% |
ServiceSource International | -8.85% | -8.76% | -4.52% |
Analyst Ratings
This is a summary of recent ratings and price targets for International Business Machines and ServiceSource International, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
International Business Machines | 0 | 10 | 6 | 0 | 2.38 |
ServiceSource International | 0 | 0 | 1 | 0 | 3.00 |
International Business Machines presently has a consensus target price of $140.0667, suggesting a potential upside of 9.09%. ServiceSource International has a consensus target price of $2.00, suggesting a potential upside of 23.46%. Given ServiceSource International's stronger consensus rating and higher possible upside, analysts plainly believe ServiceSource International is more favorable than International Business Machines.
Valuation and Earnings
This table compares International Business Machines and ServiceSource International's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
International Business Machines | $77.15 billion | 1.48 | $9.43 billion | $12.81 | 10.02 |
ServiceSource International | $216.13 million | 0.72 | $-18,680,000.00 | ($0.09) | -18.00 |
International Business Machines has higher revenue and earnings than ServiceSource International. ServiceSource International is trading at a lower price-to-earnings ratio than International Business Machines, indicating that it is currently the more affordable of the two stocks.
Summary
International Business Machines beats ServiceSource International on 9 of the 14 factors compared between the two stocks.