Comparing Concentrix (NASDAQ:CNXC) and Aramark (NYSE:ARMK)

Aramark (NYSE:ARMK) and Concentrix (NASDAQ:CNXC) are both mid-cap business services companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Institutional and Insider Ownership

90.3% of Concentrix shares are held by institutional investors. 2.5% of Aramark shares are held by insiders. Comparatively, 3.2% of Concentrix shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Aramark and Concentrix, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aramark	0	2	7	1	2.90
Concentrix	0	2	3	0	2.60

Aramark currently has a consensus target price of $45.88, indicating a potential upside of 21.77%. Concentrix has a consensus target price of $66.25, indicating a potential upside of 69.89%. Given Concentrix’s higher probable upside, analysts plainly believe Concentrix is more favorable than Aramark.

Volatility and Risk

Aramark has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500. Comparatively, Concentrix has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Earnings and Valuation

This table compares Aramark and Concentrix”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aramark	$17.87 billion	0.55	$262.52 million	$1.35	27.91
Concentrix	$9.72 billion	0.25	$251.22 million	$4.73	8.24

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

Profitability

This table compares Aramark and Concentrix’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aramark	2.02%	15.67%	3.67%
Concentrix	3.25%	16.02%	5.49%

Dividends

Aramark pays an annual dividend of $0.42 per share and has a dividend yield of 1.1%. Concentrix pays an annual dividend of $1.44 per share and has a dividend yield of 3.7%. Aramark pays out 31.1% of its earnings in the form of a dividend. Concentrix pays out 30.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aramark has increased its dividend for 1 consecutive years and Concentrix has increased its dividend for 3 consecutive years. Concentrix is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Concentrix beats Aramark on 10 of the 18 factors compared between the two stocks.

About Aramark

Aramark provides food and facilities services to education, healthcare, business and industry, sports, leisure, and corrections clients in the United States and internationally. It operates through two segments, Food and Support Services United States, and Food and Support Services International. The company offers food-related managed services, including dining, catering, food service management, and convenience-oriented retail services; non-clinical food and food-related support services, such as patient food and nutrition, retail food, environmental services, and procurement services; and plant operations and maintenance, custodial/housekeeping, energy management, grounds keeping, and capital project management services. It also provides on-site restaurants, catering, convenience stores, and executive dining services; beverage and vending services; and facility management services comprising landscaping, transportation, capital program management, payment services, and other facility consulting services relating to building operations. In addition, the company offers concessions, banquet, and catering services; retail services and merchandise sale, recreational, and lodging services; and facility management services at sports, entertainment, and recreational facilities. Further, it offers correctional food; and operates commissaries, laundry facilities, and property rooms. It primarily serves business and industry, sports, leisure and corrections, education, healthcare, public institutions, manufacturing, transportation, service, and other industries. The company was formerly known as ARAMARK Holdings Corporation. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

About Concentrix

Concentrix Corporation engages in the provision of technology-infused customer experience (CX) solutions worldwide. The company provides CX process optimization, technology innovation, front- and back-office automation, analytics, and business transformation services, across various channels of communication, such as voice, chat, email, social media, asynchronous messaging, and custom applications. It also offers customer lifecycle management; customer experience/user experience strategy and design; analytics and actionable insights; digital transformation services that design and engineer CX solutions to enable efficient customer self-service and build customer loyalty; customer engagement solutions and services that address the entirety of the customer lifecycle; AI technology that can intelligently act on customer intent to improve customer experience with non-human engagement; voice of the customer and analytics solutions to gather and analyze customer feedback to foster loyalty to, and growth with, clients; analytics and consulting solutions that synthesize data and provide professional insight to improve clients’ customer experience strategies; vertical business process outsourcing (BPO) services; and back office BPO services that support clients in non-customer facing areas. The company’s clients include technology and consumer electronics, retail, travel and e-commerce, communications and media, banking, financial services and insurance, healthcare, and others, as well as global IPOs, social brands, and banks. Concentrix Corporation was founded in 2004 and is based in Newark, California.