Head to Head Review: WNS (Holdings) Limited (WNS) and StarTek (NYSE:SRT)

WNS (Holdings) Limited (NYSE: WNS) and StarTek (NYSE:SRT) are both small-cap business services companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.

Profitability

This table compares WNS (Holdings) Limited and StarTek’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WNS (Holdings) Limited	6.66%	18.73%	12.52%
StarTek	1.43%	9.60%	4.34%

Volatility and Risk

WNS (Holdings) Limited has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, StarTek has a beta of -0.07, meaning that its share price is 107% less volatile than the S&P 500.

Insider and Institutional Ownership

86.8% of WNS (Holdings) Limited shares are owned by institutional investors. Comparatively, 46.1% of StarTek shares are owned by institutional investors. 17.8% of StarTek shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares WNS (Holdings) Limited and StarTek’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
WNS (Holdings) Limited	$634.69 million	2.78	$86.46 million	$0.81	43.05
StarTek	$307.06 million	0.64	$18.34 million	$0.26	47.04

WNS (Holdings) Limited has higher revenue and earnings than StarTek. WNS (Holdings) Limited is trading at a lower price-to-earnings ratio than StarTek, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for WNS (Holdings) Limited and StarTek, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WNS (Holdings) Limited	0	0	9	0	3.00
StarTek	0	0	1	0	3.00

WNS (Holdings) Limited presently has a consensus target price of $38.56, suggesting a potential upside of 10.57%. StarTek has a consensus target price of $14.00, suggesting a potential upside of 14.47%. Given StarTek’s higher probable upside, analysts plainly believe StarTek is more favorable than WNS (Holdings) Limited.

Summary

WNS (Holdings) Limited beats StarTek on 10 of the 13 factors compared between the two stocks.

WNS (Holdings) Limited Company Profile

WNS (Holdings) Limited is a global provider of business process management (BPM) services. The Company offers data, voice, analytical and business transformation services. The Company’s segments include WNS Global BPM and WNS Auto Claims BPM. Its operating segments include travel, insurance, banking and financial services, healthcare, utilities, retail and consumer products groups, auto claims and others. The WNS Global BPM includes the Company’s business activities with the exception of WNS Auto Claims BPM. WNS Auto Claims BPM is the Company’s automobile claims management business. The Company focuses on various industry verticals, such as insurance; travel and leisure; diversified businesses, including manufacturing, retail, consumer packaged goods (CPG), media and entertainment, and telecommunication (telecom); utilities; consulting and professional services; banking and financial services; healthcare, and shipping and logistics.

StarTek Company Profile

StarTek, Inc. is a customer engagement business process outsourcing (BPO) services provider, delivering customer care solutions. The Company operates through three segments: Domestic, Nearshore and Offshore. As of December 31, 2016, its Domestic segment included the operations of 13 facilities in the United States and one facility in Canada; its Offshore segment included the operations of four facilities in the Philippines, and its Nearshore segment included the operations of two facilities in Honduras and one facility in Jamaica. The Company’s service offerings include customer care, sales support, inbound sales, complex order processing, accounts receivable management, technical and product support, up-sell and cross-sell opportunities, customer intelligence analytics and other industry-specific processes. Its suite of order processing services ranges from enterprise level project management to direct-to-consumer order processing.