Analyzing NEWTEK Business Services (NASDAQ:NEWT) & ExlService (NASDAQ:EXLS)


NEWTEK Business Services (NASDAQ:NEWT) and ExlService (NASDAQ:EXLS) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, risk, institutional ownership, dividends and valuation.

Volatility & Risk

NEWTEK Business Services has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500. Comparatively, ExlService has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Valuation and Earnings

This table compares NEWTEK Business Services and ExlService’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NEWTEK Business Services $49.51 million 9.19 $35.68 million $1.94 11.83
ExlService $883.11 million 2.65 $56.73 million $2.31 29.71

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

Analyst Ratings

This is a summary of current ratings for NEWTEK Business Services and ExlService, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NEWTEK Business Services 0 2 1 0 2.33
ExlService 1 3 2 0 2.17

NEWTEK Business Services currently has a consensus price target of $17.89, indicating a potential downside of 22.03%. ExlService has a consensus price target of $70.20, indicating a potential upside of 2.30%. Given ExlService’s higher possible upside, analysts clearly believe ExlService is more favorable than NEWTEK Business Services.

Dividends

NEWTEK Business Services pays an annual dividend of $2.32 per share and has a dividend yield of 10.1%. ExlService does not pay a dividend. NEWTEK Business Services pays out 119.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

18.3% of NEWTEK Business Services shares are owned by institutional investors. Comparatively, 91.4% of ExlService shares are owned by institutional investors. 6.7% of NEWTEK Business Services shares are owned by insiders. Comparatively, 3.6% of ExlService shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares NEWTEK Business Services and ExlService’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NEWTEK Business Services 61.37% 14.42% 6.11%
ExlService 5.17% 13.56% 7.60%

Summary

ExlService beats NEWTEK Business Services on 9 of the 16 factors compared between the two stocks.

NEWTEK Business Services Company Profile

Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses. The firm seeks to makes both debt and equity investments. Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months. It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments. The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services. Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs. The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway. In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans. Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services. It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients. The firm seeks to invest in New York and Louisiana area. The firm seeks to invest $0.3 million to $3 million in businesses. It provides small business terms loans ranging from $0.05 million to $10 million. The firm also provides account receivable financing ranging from $0.05 million to $1.5 million. It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million. Newtek Business Services Corp., formerly known as Newtek Business Services Inc., was incorporated on August 26, 2013 and is headquartered in Lake Success, New York with additional offices in Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.

ExlService Company Profile

ExlService Holdings, Inc. provides operations management and analytics services in the United States, the United Kingdom, and internationally. The company offers business process management (BPM) services to the insurance industry in the areas of claims processing, subrogation, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business processing, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey, and customer services. It also provides BPM services related to the care management, utilization management, multi-chronic case management, disease management, dual eligible special needs plans, payment integrity, revenue optimization, and customer engagement for the healthcare industry; BPM services related to business processes in corporate and leisure travel, such as reservations, customer service, fulfillment, and finance and accounting; and finance and accounting BPM services, including procure-to-pay, order-to-cash, hire-to-retire, record-to-report, regulatory reporting, financial planning and analysis, audit and assurance, and treasury and tax processes. In addition, the company offers BPM services for banking and financial services industry comprising residential mortgage lending, retail banking and credit cards, commercial banking, and investment management; BPM services related to enhancing operating models, enhancing customer experience, reducing costs, shortening turnaround time, and simplifying compliance for clients; and industry-specific digital transformational services. Further, it provides predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management, risk underwriting and pricing, operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting, and data management. The company was founded in 1999 and is headquartered in New York, New York.



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