Sterling Check (NASDAQ:STER – Get Free Report) and StoneCo (NASDAQ:STNE – Get Free Report) are both business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.
Valuation & Earnings
This table compares Sterling Check and StoneCo”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sterling Check | $719.64 million | 2.28 | -$120,000.00 | ($0.17) | -98.47 |
| StoneCo | $2.41 billion | 1.31 | $318.89 million | $1.28 | 8.02 |
StoneCo has higher revenue and earnings than Sterling Check. Sterling Check is trading at a lower price-to-earnings ratio than StoneCo, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sterling Check | 0 | 4 | 1 | 0 | 2.20 |
| StoneCo | 1 | 1 | 7 | 1 | 2.80 |
Sterling Check currently has a consensus target price of $16.75, suggesting a potential upside of 0.06%. StoneCo has a consensus target price of $16.89, suggesting a potential upside of 64.61%. Given StoneCo’s stronger consensus rating and higher possible upside, analysts clearly believe StoneCo is more favorable than Sterling Check.
Profitability
This table compares Sterling Check and StoneCo’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sterling Check | -2.07% | 7.73% | 3.94% |
| StoneCo | 16.02% | 13.92% | 4.09% |
Volatility and Risk
Sterling Check has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, StoneCo has a beta of 2.29, meaning that its share price is 129% more volatile than the S&P 500.
Institutional and Insider Ownership
84.3% of Sterling Check shares are held by institutional investors. Comparatively, 73.2% of StoneCo shares are held by institutional investors. 9.9% of Sterling Check shares are held by insiders. Comparatively, 11.3% of StoneCo shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
StoneCo beats Sterling Check on 13 of the 15 factors compared between the two stocks.
About Sterling Check
Sterling Check Corp. provides technology-enabled background and identity verification services in the United States, Canada, Europe, the Middle East and Africa, and the Asia Pacific. The company offers identity verification services, such as telecom and device verification, identification document verification, facial recognition with biometric matching, social security number verification, and live video chat identification proofing; fingerprinting; background checks, including criminal record checks, sex offender registries, civil court records, motor vehicle and driving license records, executive investigations, credit reports, social media searches, and contingent workforce solutions; liens, judgments, and bankruptcies; and sanctions, risk, and compliance checks. It also provides credential verification services, which include employment verification, education verification, credential verification, professional reference checks, and department of transportation; drug and health screening; onboarding solutions, including Sterling I-9 that integrates a suite of screening and onboarding services and onboarding forms; and workforce, medical license, and motor vehicle records monitoring solutions. The company's services are delivered through its cloud-based technology platform that empowers organizations with real-time and data-driven insights to conduct and manage their employment screening programs. It serves a client base in a range of industries, such as healthcare, gig economy, financial and business services, industrials, retail, contingent, technology, media and entertainment, transportation and logistics, hospitality, education, and government. The company was formerly known as Sterling Ultimate Parent Corp. and changed its name to Sterling Check Corp. in August 2021. Sterling Check Corp. was founded in 1975 and is headquartered in Independence, Ohio.
About StoneCo
StoneCo Ltd. provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and sells solutions to brick-and-mortar and digital merchants through sales team. The company served small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands.
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