Syntel (NASDAQ: SYNT) and Echelon Corporation (NASDAQ:ELON) are both small-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, analyst recommendations, dividends and profitability.

Profitability

This table compares Syntel and Echelon Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Syntel 16.16% N/A 33.50%
Echelon Corporation -16.22% -19.68% -14.76%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Syntel and Echelon Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Syntel 0 5 2 0 2.29
Echelon Corporation 0 0 0 0 N/A

Syntel currently has a consensus target price of $22.50, indicating a potential upside of 21.69%. Given Syntel’s higher possible upside, equities analysts clearly believe Syntel is more favorable than Echelon Corporation.

Volatility & Risk

Syntel has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Echelon Corporation has a beta of -0.54, suggesting that its share price is 154% less volatile than the S&P 500.

Insider and Institutional Ownership

34.7% of Syntel shares are owned by institutional investors. Comparatively, 20.5% of Echelon Corporation shares are owned by institutional investors. 61.1% of Syntel shares are owned by insiders. Comparatively, 9.1% of Echelon Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Syntel and Echelon Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Syntel $931.82 million 1.66 $248.82 million ($1.11) -16.66
Echelon Corporation $31.50 million 0.68 -$4.38 million ($1.15) -4.17

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

Summary

Syntel beats Echelon Corporation on 12 of the 12 factors compared between the two stocks.

Syntel Company Profile

Syntel, Inc. (Syntel) is a global provider of digital transformation, information technology (IT) and knowledge process outsourcing (KPO) services. The Company operates through five segments: Banking and Financial Services, Healthcare and Life Sciences, Insurance, Manufacturing, and Retail, Logistics and Telecom. Syntel provides a range of services to its customers through its IT services, including Managed Services, Digital One and through its KPO services. Through its Managed Services offering, the Company provides software applications development, maintenance, testing, IT infrastructure, cloud and migration services. Through its SyntBots platform, the Company delivers internally developed automation capabilities that improve the productivity and quality of its Managed Services offerings. The Company’s Digital One service line centralizes the delivery of digital architecture, Web and mobile applications, user experience, Big Data, analytics, social and Internet of Things services.

Echelon Corporation Company Profile

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.

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