Financial Analysis: ServiceNow (NYSE:NOW) & Telos (NASDAQ:TLS)

Telos (NASDAQ:TLS) and ServiceNow (NYSE:NOW) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Institutional and Insider Ownership

62.1% of Telos shares are held by institutional investors. Comparatively, 87.2% of ServiceNow shares are held by institutional investors. 14.9% of Telos shares are held by company insiders. Comparatively, 0.3% of ServiceNow shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Telos and ServiceNow’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Telos	-14.25%	-11.95%	-8.45%
ServiceNow	12.59%	18.16%	9.04%

Analyst Recommendations

This is a summary of recent ratings for Telos and ServiceNow, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telos	1	2	3	0	2.33
ServiceNow	1	5	35	1	2.86

Telos currently has a consensus price target of $7.10, indicating a potential upside of 63.59%. ServiceNow has a consensus price target of $142.17, indicating a potential upside of 51.67%. Given Telos’ higher probable upside, equities research analysts plainly believe Telos is more favorable than ServiceNow.

Risk and Volatility

Telos has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, ServiceNow has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares Telos and ServiceNow”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Telos	$164.80 million	1.97	-$36.55 million	($0.35)	-12.40
ServiceNow	$13.96 billion	6.92	$1.75 billion	$1.68	55.79

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

Summary

ServiceNow beats Telos on 12 of the 15 factors compared between the two stocks.

About Telos

Telos Corporation, together with its subsidiaries, provides cyber, cloud, and enterprise security solutions worldwide. The company operates in two segments, Security Solutions and Secure Networks. It provides Xacta, a platform for enterprise cyber risk management and security compliance automation; and consulting, assessment and compliance, engineering and evaluation, operations, and penetration testing services. The company also offers Telos Automated Message Handling System, a web-based organizational message distribution and management for mission-critical communications used by military field operatives; and Telos Advanced Cyber Analytics solution, which is a threat feed source of global Internet Protocol addresses known to engage in potentially malicious activity, including mass scanning and generic opportunistic attacks; and Telos Ghost, a solution to eliminate cyberattack surfaces by obfuscating and encrypting data, masking user identity and location, and hiding network resources, as well as provides security and privacy for intelligence gathering, cyber threat protection, securing critical infrastructure, and protecting communications and applications. In addition, the company provides IDTrust360, an enterprise digital trusted identity risk platform for extending flexible hybrid cloud identity services; and ONYX, a touchless fingerprint biometric solution for mobile devices. Further, it offers secure mobility solutions that enable remote work and minimize operational and security concerns across and beyond the enterprise; and network management and defense services for operating, administrating, and defending complex enterprise networks and services for defensive cyber operations. It serves the United States federal government, large commercial businesses, state and local governments, and international customers. Telos Corporation was founded in 1968 and is headquartered in Ashburn, Virginia.

About ServiceNow

ServiceNow, Inc. provides end to-end intelligent workflow automation platform solutions for digital businesses in the North America, Europe, the Middle East and Africa, Asia Pacific, and internationally. The company operates the Now platform for end-to-end digital transformation, artificial intelligence, machine learning, robotic process automation, process mining, performance analytics, and collaboration and development tools. It also provides asset management, cloud observability, integrated risk management; information technology (IT) service management applications; IT service management product suite for enterprise's employees, customers, and partners; strategic portfolio management product suite; IT operations management product that connects a customer's physical and cloud-based IT infrastructure; IT asset management; and security operations that connects with internal and third party. In addition, the company offers integrated risk management product to manage risk and resilience; environmental, social and governance management product; human resources, legal, and workplace service delivery products; customer service management product; and field service management applications. Further, the company provides app engine product; automation engine; platform privacy and security product; and source-to-pay operations. It serves to government, financial services, healthcare, telecommunications, manufacturing, IT services, technology, oil and gas, education, and consumer products through service providers and resale partners. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.