ExlService (NASDAQ:EXLS) versus CDW (NASDAQ:CDW) Critical Review

ExlService (NASDAQ:EXLS) and CDW (NASDAQ:CDW) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and price targets for ExlService and CDW, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ExlService	0	1	5	0	2.83
CDW	0	3	5	1	2.78

ExlService presently has a consensus price target of $41.50, suggesting a potential upside of 59.76%. CDW has a consensus price target of $144.13, suggesting a potential upside of 7.97%. Given ExlService’s stronger consensus rating and higher possible upside, analysts plainly believe ExlService is more favorable than CDW.

Profitability

This table compares ExlService and CDW’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ExlService	11.66%	28.50%	15.48%
CDW	4.70%	49.67%	8.02%

Earnings and Valuation

This table compares ExlService and CDW”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ExlService	$2.09 billion	1.90	$251.02 million	$1.57	16.55
CDW	$22.42 billion	0.76	$1.07 billion	$8.22	16.24

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

Risk & Volatility

ExlService has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, CDW has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.

Insider and Institutional Ownership

92.9% of ExlService shares are held by institutional investors. Comparatively, 93.2% of CDW shares are held by institutional investors. 3.7% of ExlService shares are held by insiders. Comparatively, 0.8% of CDW shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

About ExlService

ExlService Holdings, Inc. operates as a data analytics, and digital operations and solutions company in the United States and internationally. The company operates through Insurance, Healthcare, Analytics, and Emerging Business segments. It also provides digital operations and solutions and analytics-driven services, such as claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business acquisition, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey, and customer service using digital technology, artificial intelligence, machine learning, and advanced automation; digital customer acquisition services using a software-as-a-service delivery model through LifePRO and LISS platforms; subrogation services; and Subrosource software platform, an end-to-end subrogation platform. In addition, the company offers health care services related to care management, utilization management, disease management, payment integrity, revenue optimization, and customer engagement. Further, it provides financial planning and analysis, management reporting, forecasting and decision support, data management, regulatory reporting and risk, and compliance services; reservations, customer, and fulfilment services; freight billing, collections, claims management, freight audit, freight scheduling, supply chain management, and revenue assurance services; residential mortgage lending, title verification and validation, retail banking and credit cards, trust verification, commercial banking, and investment management; merchandising, pricing, and demand forecasting; and digital operations and solutions. The company offers predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management. ExlService Holdings, Inc. was founded in 1999 and is headquartered in New York, New York.

About CDW

CDW Corporation provides information technology (IT) solutions in the United States, the United Kingdom, and Canada. It operates through three segments: Corporate, Small Business, and Public. The company offers discrete hardware and software products and services, as well as integrated IT solutions, including on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security. It also provides hardware products comprising notebooks/mobile devices, tablets, network communications, desktop computers, collaboration, data storage and servers, and others; and software products, such as cloud solutions, software assurance, application suites, security, virtualization, operating systems, and network management. In addition, the company offers advisory and design, software development, implementation, managed, professional, configuration, partner, and telecom services, as well as warranties; delivers and manages mission critical software, systems, and network solutions; and implementation and installation, and repair services to its customers through various third-party service providers. It serves government, education, and healthcare customers; and small, medium, and large business customers. CDW Corporation was founded in 1984 and is headquartered in Vernon Hills, Illinois.