Telos (NASDAQ:TLS – Get Free Report) and Stem (NYSE:STEM – Get Free Report) are both small-cap technology companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.
Insider & Institutional Ownership
62.1% of Telos shares are held by institutional investors. Comparatively, 61.6% of Stem shares are held by institutional investors. 14.9% of Telos shares are held by company insiders. Comparatively, 5.1% of Stem shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares Telos and Stem’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Telos | -4.66% | 4.17% | 2.84% |
| Stem | -49.37% | N/A | -21.85% |
Valuation & Earnings
This table compares Telos and Stem”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Telos | $197.46 million | 2.90 | -$36.55 million | ($0.12) | -63.75 |
| Stem | $148.03 million | 0.16 | $137.76 million | ($8.49) | -0.29 |
Stem has lower revenue, but higher earnings 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.
Volatility and Risk
Telos has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Stem has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Telos and Stem, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Telos | 1 | 3 | 3 | 0 | 2.29 |
| Stem | 1 | 4 | 1 | 0 | 2.00 |
Telos currently has a consensus price target of $7.60, indicating a potential downside of 0.65%. Stem has a consensus price target of $6.54, indicating a potential upside of 163.25%. Given Stem’s higher possible upside, analysts plainly believe Stem is more favorable than Telos.
Summary
Telos beats Stem on 10 of the 14 factors compared between the two stocks.
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.
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.
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