Stars Group (NASDAQ:TSG) and Model N (NYSE:MODN) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Stars Group and Model N’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stars Group 2.48% 11.90% 4.64%
Model N -12.15% -25.25% -8.22%

Earnings and Valuation

This table compares Stars Group and Model N’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stars Group $2.53 billion 2.14 $62.82 million $1.81 10.37
Model N $141.24 million 5.18 -$19.29 million ($0.43) -51.05

Stars Group has higher revenue and earnings than Model N. Model N is trading at a lower price-to-earnings ratio than Stars Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

79.5% of Stars Group shares are owned by institutional investors. Comparatively, 83.2% of Model N shares are owned by institutional investors. 1.6% of Model N shares are owned 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Stars Group and Model N, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stars Group 1 6 2 0 2.11
Model N 0 0 8 0 3.00

Stars Group presently has a consensus price target of $22.87, suggesting a potential upside of 21.82%. Model N has a consensus price target of $31.00, suggesting a potential upside of 41.23%. Given Model N’s stronger consensus rating and higher probable upside, analysts clearly believe Model N is more favorable than Stars Group.

Volatility and Risk

Stars Group has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500. Comparatively, Model N has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500.

Summary

Stars Group beats Model N on 8 of the 14 factors compared between the two stocks.

About Stars Group

The Stars Group Inc. engages in online gaming and betting businesses primarily in Europe, Australia, and the Americas. It owns and operates gaming and related interactive entertainment businesses, such as online real-money poker, casino and betting, play-money poker, and casino and sports prediction games, which are delivered through mobile, Web, and desktop applications. The company provides its products under various owned or licensed gaming and related consumer businesses and brands, including PokerStars, PokerStars Casino, BetStars, Full Tilt, BetEasy, Sky Bet, Sky Vegas, Sky Casino, Sky Bingo, Sky Poker, and Oddschecker, as well as live poker tour and events brands, such as PokerStars Players No Limit Hold'em Championship, European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour, Asia Pacific Poker Tour, PokerStars Festival, and PokerStars MEGASTACK. The company was formerly known as Amaya, Inc. and changed its name to The Stars Group Inc. in August 2017. The Stars Group Inc. was founded in 2004 and is headquartered in Toronto, Canada.

About Model N

Model N, Inc. provides revenue management cloud solutions for the life sciences and technology companies. The company's cloud-based revenue management solutions include Revenue Cloud for Pharma, Revenue Cloud for Med Tech, and Revenue Cloud for Semiconductors and High Tech Manufacturing. It develops software applications, such as managed care and government pricing for life science companies; and channel incentives for technology companies. The company also offers revenue management processes, such as pricing, contracting, rebates, incentives, channel management, and regulatory compliance. In addition, Model N, Inc. provides implementation, managed, strategic, and customer support services. It primarily serves large and mid-sized organizations worldwide through its direct sales force. Model N, Inc. was founded in 1999 and is headquartered in San Mateo, California, with additional offices in the United States, India, and Switzerland.

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