WNS (NYSE:WNS) and Alliance Data Systems (NYSE:ADS) are both mid-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.
This table compares WNS and Alliance Data Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alliance Data Systems||3.41%||40.98%||2.48%|
This is a summary of recent ratings for WNS and Alliance Data Systems, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alliance Data Systems||1||9||7||0||2.35|
WNS presently has a consensus price target of $59.70, suggesting a potential upside of 43.06%. Alliance Data Systems has a consensus price target of $95.71, suggesting a potential upside of 127.62%. Given Alliance Data Systems’ higher probable upside, analysts clearly believe Alliance Data Systems is more favorable than WNS.
Volatility and Risk
WNS has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500. Comparatively, Alliance Data Systems has a beta of 2.58, meaning that its stock price is 158% more volatile than the S&P 500.
Valuation and Earnings
This table compares WNS and Alliance Data Systems’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|WNS||$928.30 million||2.24||$116.77 million||$2.54||16.43|
|Alliance Data Systems||$5.58 billion||0.36||$278.00 million||$16.39||2.57|
Alliance Data Systems has higher revenue and earnings than WNS. Alliance Data Systems is trading at a lower price-to-earnings ratio than WNS, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
95.2% of WNS shares are held by institutional investors. Comparatively, 91.0% of Alliance Data Systems shares are held by institutional investors. 2.8% of Alliance Data Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
WNS Company Profile
WNS (Holdings) Limited, a business process management company, together with its subsidiaries, provides data, voice, analytical, and business transformation services worldwide. It operates through two segments, WNS Global BPM and WNS Auto Claims BPM. The company offers industry-specific services to clients primarily in insurance; travel and leisure; diversified businesses, including manufacturing, retail, consumer packaged goods, media and entertainment, and telecommunication; utilities; consulting and professional services; healthcare; banking and financial services; and shipping and logistics industries. It also provides shared services, such as customer interaction, finance and accounting, research and analytics, technology, legal, and human resources outsourcing services. In addition, the company offers transformation services designed to help its clients to modify their business processes to enhance productivity, as well as manage changes in the business environment and leverage business knowledge to increase market competitiveness. Further, it provides claims handling and repair management services for automobile repairs through a network of third party repair centers; and a suite of accident management services, such as credit hire and credit repair. WNS (Holdings) Limited was founded in 1996 and is based in Mumbai, India.
Alliance Data Systems Company Profile
Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions worldwide. It operates through three segments: LoyaltyOne, Epsilon, and Card Services. The company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. It also focuses on facilitating and managing interactions between its clients and their customers through various consumer marketing channels, including in-store, online, email, social media, mobile, direct mail, and telephone. The company captures and analyzes data created during each customer interaction, leveraging the insight derived from that data to enable clients to identify and acquire new customers and to enhance customer loyalty. It serves clients across various end-markets, including financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications, insurance, and healthcare. Alliance Data Systems Corporation was founded in 1996 and is headquartered in Plano, Texas.
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