Critical Comparison: Leidos (NYSE:LDOS) vs. ServiceNow (NYSE:NOW)

ServiceNow (NYSE:NOW) and Leidos (NYSE:LDOS) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Insider and Institutional Ownership

87.2% of ServiceNow shares are held by institutional investors. Comparatively, 76.1% of Leidos shares are held by institutional investors. 0.3% of ServiceNow shares are held by insiders. Comparatively, 0.8% of Leidos shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for ServiceNow and Leidos, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServiceNow	1	5	35	2	2.88
Leidos	0	7	6	1	2.57

ServiceNow currently has a consensus target price of $141.85, indicating a potential upside of 33.47%. Leidos has a consensus target price of $187.50, indicating a potential upside of 54.24%. Given Leidos’ higher probable upside, analysts clearly believe Leidos is more favorable than ServiceNow.

Earnings & Valuation

This table compares ServiceNow and Leidos”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServiceNow	$13.28 billion	8.25	$1.75 billion	$1.68	63.26
Leidos	$17.17 billion	0.89	$1.45 billion	$10.92	11.13

ServiceNow has higher earnings, but lower revenue than Leidos. Leidos is trading at a lower price-to-earnings ratio than ServiceNow, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ServiceNow and Leidos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServiceNow	12.59%	18.16%	9.04%
Leidos	8.15%	31.92%	11.23%

Risk & Volatility

ServiceNow has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500. Comparatively, Leidos has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500.

Summary

ServiceNow beats Leidos on 9 of the 15 factors compared between the two stocks.

About ServiceNow

ServiceNow, Inc. provides end to-end intelligent workflow automation platform solutions for digital businesses in the North America, Europe, the Middle East and Africa, Asia Pacific, and internationally. The company operates the Now platform for end-to-end digital transformation, artificial intelligence, machine learning, robotic process automation, process mining, performance analytics, and collaboration and development tools. It also provides asset management, cloud observability, integrated risk management; information technology (IT) service management applications; IT service management product suite for enterprise's employees, customers, and partners; strategic portfolio management product suite; IT operations management product that connects a customer's physical and cloud-based IT infrastructure; IT asset management; and security operations that connects with internal and third party. In addition, the company offers integrated risk management product to manage risk and resilience; environmental, social and governance management product; human resources, legal, and workplace service delivery products; customer service management product; and field service management applications. Further, the company provides app engine product; automation engine; platform privacy and security product; and source-to-pay operations. It serves to government, financial services, healthcare, telecommunications, manufacturing, IT services, technology, oil and gas, education, and consumer products through service providers and resale partners. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.

About Leidos

Leidos Holdings, Inc., together with its subsidiaries, provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. The company operates through Defense Solutions, Civil, and Health segments. The Defense Solutions segment offers national security solutions and systems for air, land, sea, space, and cyberspace for the U.S. Intelligence Community, the Department of Defense, the space development agency, the National Aeronautics and Space Administration, defense information systems agency, military services, and government agencies of U.S. allies abroad, as well as other federal and commercial customers in the national security industry. The solutions include technology, large-scale systems, command and control platforms, data analytics, logistics, and cybersecurity solutions, as well as intelligence analysis and operations support services to critical missions. The Civil segment provides systems integration services to air navigation service providers, including the federal aviation administration, the En route automation modernization, advanced technology oceanic procedure, time based flow management, terminal flight data management, geo-7, and future flight services, as well as enterprise-information display systems; and security detection services. It also offers information technology (IT) solutions in cloud computing, mobility, application modernization, DevOps, data center, network modernization, asset management, help desk operations, and digital workplace enablement; and environment, energy, and infrastructure services. The Health segment offers solutions to federal and commercial customers responsible for health and well-being of people, include health information management, managed health, digital modernization, and life sciences research and development services. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, Virginia.