Stem (NYSE:STEM – Get Free Report) and Telos (NASDAQ:TLS – Get Free Report) are both small-cap technology companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.
Risk and Volatility
Stem has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500. Comparatively, Telos has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Stem and Telos, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Stem | 1 | 4 | 1 | 0 | 2.00 |
| Telos | 1 | 3 | 3 | 0 | 2.29 |
Stem currently has a consensus target price of $6.54, indicating a potential upside of 163.25%. Telos has a consensus target price of $7.60, indicating a potential downside of 0.65%. Given Stem’s higher possible upside, equities analysts plainly believe Stem is more favorable than Telos.
Earnings & Valuation
This table compares Stem and Telos”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Stem | $148.03 million | 0.16 | $137.76 million | ($8.49) | -0.29 |
| Telos | $197.46 million | 2.90 | -$36.55 million | ($0.12) | -63.75 |
Stem has higher earnings, but lower revenue than Telos. Telos is trading at a lower price-to-earnings ratio than Stem, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
61.6% of Stem shares are owned by institutional investors. Comparatively, 62.1% of Telos shares are owned by institutional investors. 5.1% of Stem shares are owned by insiders. Comparatively, 14.9% of Telos 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.
Profitability
This table compares Stem and Telos’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Stem | -49.37% | N/A | -21.85% |
| Telos | -4.66% | 4.17% | 2.84% |
Summary
Telos beats Stem on 10 of the 14 factors compared between the two stocks.
About Stem
Stem, Inc. (NYSE: STEM) provides software and technology solutions for the clean energy industry. The company helps commercial, industrial, utility, and renewable energy customers manage energy storage systems, solar generation, and other distributed energy assets. Stem’s platform uses artificial intelligence, data analytics, and automation to optimize battery charging and discharging, support electricity cost management, and participate in energy markets. Its offerings include the Athena software platform, which manages energy storage and renewable assets, as well as PowerTrack, a monitoring and asset-management solution for solar and clean energy portfolios.
About Telos
Telos Corporation is a cybersecurity and information technology company serving government agencies and commercial organizations. Its offerings include cybersecurity services, secure network and cloud solutions, identity management, and technology consulting. The company’s products include the Xacta platform, which helps organizations manage cybersecurity risk and compliance, and Telos ID, which provides identity verification and authentication services. Telos also supports secure communications and mobility for customers with demanding security requirements.
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