Financial Analysis: GDS (GDS) versus IHS Markit (INFO)

GDS (NASDAQ:GDS) and IHS Markit (NASDAQ:INFO) are both business services companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Analyst Ratings

This is a summary of recent recommendations and price targets for GDS and IHS Markit, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GDS 1 0 6 1 2.88
IHS Markit 1 4 11 0 2.63



GDS presently has a consensus price target of $38.89, suggesting a potential upside of 75.49%. IHS Markit has a consensus price target of $57.57, suggesting a potential upside of 11.94%. Given GDS’s stronger consensus rating and higher possible upside, equities research analysts clearly believe GDS is more favorable than IHS Markit.

Institutional & Insider Ownership

39.7% of GDS shares are owned by institutional investors. Comparatively, 96.3% of IHS Markit shares are owned by institutional investors. 2.7% of IHS Markit 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.

Risk and Volatility

GDS has a beta of 2.68, suggesting that its stock price is 168% more volatile than the S&P 500. Comparatively, IHS Markit has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Earnings & Valuation

This table compares GDS and IHS Markit’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GDS $248.40 million 10.48 -$48.38 million ($0.51) -43.45
IHS Markit $3.60 billion 5.63 $416.90 million $1.68 30.61

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

Profitability

This table compares GDS and IHS Markit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GDS -18.51% -8.53% -2.72%
IHS Markit 14.57% 9.55% 5.07%

Summary

IHS Markit beats GDS on 10 of the 15 factors compared between the two stocks.

About GDS

GDS Holdings Limited, together with its subsidiaries, designs, builds, and operates data centers in the People's Republic of China. The company provides colocation, managed hosting, and managed cloud services. Its data centers service customers that primarily operate in the Internet and banking industries in Shanghai, Beijing, Shenzhen, Guangzhou, and Chengdu. The company serves Internet companies, financial institutions, telecommunications and IT service providers, and large domestic private sector and multinational corporations. GDS Holdings Limited was incorporated in 2006 and is headquartered in Shanghai, the People's Republic of China.

About IHS Markit

IHS Markit Ltd. provides critical information, analytics, and solutions for various industries and markets that drive economies worldwide. The company's information, analytics, and solutions enhance operational efficiency and offer deep insights for customers in business, finance, and government. Its Resources segment provides upstream, midstream, downstream, and power/gas/coal/renewables services. This segment also offers data for manufacturing processes, as well as capital expenditure, cost, price, production, trade, demand, and capacity industry analysis and forecasts. The company's Transportation segment provides authoritative analysis, as well as sales and production forecasts for light vehicles, medium and heavy commercial vehicles, powertrains, components, and technology systems; and performance measurement tools and marketing solutions for car makers, dealers, and agencies. It also offers comprehensive data on ships, as well as monthly import and export statistics on approximately 90 countries; and specifications for military vehicles, naval vessels, and aircraft types. The company's Consolidated Markets & Solutions segment provides content and analytics on engineering and technical standards, codes, specifications, handbooks, reference books, journals, and other scientific and technical documents, as well as software-based engineering decision engines; components and devices, performance analytics, and end market intelligence for technology, media, and telecom industries; and economic and risk data, forecast, and analytic tools. Its Financial Services segment provides pricing and reference data, indices, valuation and trading services, trade processing, enterprise software, and managed services to traders, portfolio managers, risk managers, research professionals, and other financial markets participants, as well as operations, compliance, and enterprise data managers. IHS Markit Ltd. was founded in 1959 and is headquartered in London, the United Kingdom.

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