Ritchie Bros. Auctioneers (NYSE: RBA) and ExlService Holdings (NASDAQ:EXLS) are both mid-cap business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Earnings and Valuation

This table compares Ritchie Bros. Auctioneers and ExlService Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ritchie Bros. Auctioneers $566.33 million 5.33 $203.46 million $0.47 59.98
ExlService Holdings $720.56 million 2.84 $101.10 million $1.97 30.80

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

Risk & Volatility

Ritchie Bros. Auctioneers has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500. Comparatively, ExlService Holdings has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Ritchie Bros. Auctioneers and ExlService Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ritchie Bros. Auctioneers 2 5 4 0 2.18
ExlService Holdings 1 4 6 0 2.45

Ritchie Bros. Auctioneers presently has a consensus price target of $30.67, indicating a potential upside of 8.79%. ExlService Holdings has a consensus price target of $59.82, indicating a potential downside of 1.42%. Given Ritchie Bros. Auctioneers’ higher probable upside, research analysts clearly believe Ritchie Bros. Auctioneers is more favorable than ExlService Holdings.

Dividends

Ritchie Bros. Auctioneers pays an annual dividend of $0.68 per share and has a dividend yield of 2.4%. ExlService Holdings does not pay a dividend. Ritchie Bros. Auctioneers pays out 144.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ExlService Holdings has raised its dividend for 14 consecutive years.

Insider & Institutional Ownership

96.2% of Ritchie Bros. Auctioneers shares are held by institutional investors. Comparatively, 94.7% of ExlService Holdings shares are held by institutional investors. 0.4% of Ritchie Bros. Auctioneers shares are held by company insiders. Comparatively, 5.8% of ExlService Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Ritchie Bros. Auctioneers and ExlService Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ritchie Bros. Auctioneers 8.96% 14.72% 6.14%
ExlService Holdings 9.53% 14.34% 11.04%

Summary

ExlService Holdings beats Ritchie Bros. Auctioneers on 10 of the 17 factors compared between the two stocks.

About Ritchie Bros. Auctioneers

Ritchie Bros Auctioneers Inc is a Canada-based holding company. The Company is an industrial auctioneer and used equipment distributor, selling used equipment and other assets. Its segments include Core Auction, which is a network of auction locations that conduct live, unreserved auctions with both on-site and online bidding, and Other, which includes its EquipmentOne and Mascus International Holding B.V. (Mascus) online services. EquipmentOne is an online marketplace that equipment sellers can navigate independently. EquipmentOne facilitates the completion of sales through a settlement process managed by EquipmentOne that protects both the seller and the buyer. Mascus is an online equipment listing service for used heavy machinery and trucks. It offers subscriptions to equipment dealers, brokers, exporters and equipment manufacturers to list equipment available for sale at a listed price. The Company, through Mascus, provides online advertising services, business tools and solutions.

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.

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