Servicemaster Global (SERV) and Nelnet (NNI) Critical Comparison

Servicemaster Global (NYSE: SERV) and Nelnet (NYSE:NNI) are both mid-cap construction companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, earnings, analyst recommendations, valuation and risk.

Dividends

Nelnet pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. Servicemaster Global does not pay a dividend. Nelnet pays out 12.1% of its earnings in the form of a dividend. Nelnet has increased its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations for Servicemaster Global and Nelnet, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Servicemaster Global 0 2 10 0 2.83
Nelnet 0 1 1 0 2.50

Servicemaster Global presently has a consensus target price of $53.18, indicating a potential downside of 2.02%. Nelnet has a consensus target price of $53.50, indicating a potential upside of 2.04%. Given Nelnet’s higher possible upside, analysts clearly believe Nelnet is more favorable than Servicemaster Global.

Risk & Volatility

Servicemaster Global has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, Nelnet has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Insider & Institutional Ownership

40.0% of Nelnet shares are held by institutional investors. 1.2% of Servicemaster Global shares are held by insiders. Comparatively, 46.1% of Nelnet 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.

Profitability

This table compares Servicemaster Global and Nelnet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Servicemaster Global 8.16% 40.22% 5.42%
Nelnet 17.51% 8.70% 0.71%

Valuation & Earnings

This table compares Servicemaster Global and Nelnet’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Servicemaster Global $2.75 billion 2.67 $155.00 million $1.74 31.20
Nelnet $1.24 billion 1.72 $256.75 million $5.29 9.91

Nelnet has lower revenue, but higher earnings than Servicemaster Global. Nelnet is trading at a lower price-to-earnings ratio than Servicemaster Global, indicating that it is currently the more affordable of the two stocks.

Summary

Nelnet beats Servicemaster Global on 9 of the 17 factors compared between the two stocks.

Servicemaster Global Company Profile

ServiceMaster Global Holdings, Inc. is a provider of essential residential and commercial services. The Company operates through three segments: Terminix, American Home Shield and the Franchise Services Group. Its portfolio of brands includes Terminix, American Home Shield, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. The Terminix segment provides termite and pest control services in the United States. The American Home Shield segment provides home warranty plans that cover the repair or replacement of components of up to 21 household systems and appliances, including electrical, plumbing, central heating and air conditioning (HVAC) systems, dishwashers and ovens/cook tops. The Franchise Services Group segment consists of the ServiceMaster Restore (disaster restoration), ServiceMaster Clean (janitorial), Merry Maids (residential cleaning), Furniture Medic (cabinet and wood furniture repair) and AmeriSpec (home inspection) businesses.

Nelnet Company Profile

Nelnet, Inc. focuses on delivering education-related products and services and student loan asset management. The Company is engaged in student loan servicing, tuition payment processing and school information systems, and communications. The Company’s segments include Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce, Communications, Asset Generation and Management, and Corporate and Other Activities. The Company earns fee-based revenue through its Loan Systems and Servicing, Tuition Payment Processing, and Communications operating segments. In addition, the Company earns interest income on its student loan portfolio in its Asset Generation and Management operating segment. Corporate and Other Activities include real estate and other investments. The Company, through Allo Communications LLC, is engaged in the sale of advanced telecommunication services, including Internet, broadband, telephone, and television services.

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