Head to Head Contrast: CGI Group (GIB) versus Echelon (ELON)

Echelon (NASDAQ: ELON) and CGI Group (NYSE:GIB) are both technology companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

Volatility & Risk

Echelon has a beta of -0.68, suggesting that its share price is 168% less volatile than the S&P 500. Comparatively, CGI Group has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Earnings & Valuation

This table compares Echelon and CGI Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Echelon $32.38 million 0.80 -$4.10 million ($1.06) -5.42
CGI Group $8.26 billion 1.64 $788.50 million $2.72 19.52

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

Profitability

This table compares Echelon and CGI Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Echelon -10.90% -15.04% -10.75%
CGI Group 9.52% 17.51% 9.69%

Analyst Recommendations

This is a summary of recent ratings for Echelon and CGI Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Echelon 0 0 0 0 N/A
CGI Group 0 1 4 0 2.80

CGI Group has a consensus target price of $72.33, suggesting a potential upside of 36.22%. Given CGI Group’s higher probable upside, analysts clearly believe CGI Group is more favorable than Echelon.

Institutional and Insider Ownership

22.8% of Echelon shares are owned by institutional investors. Comparatively, 66.5% of CGI Group shares are owned by institutional investors. 10.2% of Echelon shares are owned by insiders. Comparatively, 9.9% of CGI Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

CGI Group beats Echelon on 12 of the 13 factors compared between the two stocks.

About Echelon

Echelon Corporation develops open-standard control networking platforms and delivers elements necessary to design, install, monitor and control communities of devices. The Company’s products enable everyday devices, such as air conditioners, outdoor lighting, appliances, electricity meters, light switches, thermostats and valves to be inter-connected and be part of the Industrial Internet of Things (IIoT) market. It operates through the IIoT segment. Its IIoT business sells products and services that form embedded control platforms, such as LONWORKS and IzoT. The Company’s IIoT business also sells products and services, which include components, control nodes and development software. The Company also offers a solution consisting of outdoor lighting controllers, segment controllers, gateways and software to end customers, such as municipalities, cities, campuses and commercial enterprises. The Company markets its products under the Echelon brand.

About CGI Group

CGI Group Inc. (CGI), directly or through its subsidiaries, manages information technology (IT) services, as well as business process services (BPS). The Company’s services include the management of IT and business functions (outsourcing), systems integration and consulting, as well as the sale of software solutions. The Company’s segments are United States of America (U.S.); Nordics; Canada; France (including Luxembourg and Morocco) (France); United Kingdom (U.K.); Eastern, Central and Southern Europe (primarily the Netherlands and Germany) (ECS); and Asia Pacific (including Australia, India and the Philippines) (Asia Pacific). Its services in an end-to-end engagement include application development, integration and maintenance; technology infrastructure management; and business process services, such as collections and payroll management. Its Internet Protocol (IP)-based business solutions include CGI Advantage, Momentum, Credit Services Solutions, CGI Atlas360 and CGI Trade360.

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