GDS (NASDAQ:GDS) versus International Business Machines (NYSE:IBM) Head-To-Head Comparison

International Business Machines (NYSE:IBM) and GDS (NASDAQ:GDS) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for International Business Machines and GDS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Business Machines	1	10	17	0	2.57
GDS	0	2	3	1	2.83

International Business Machines presently has a consensus target price of $265.16, suggesting a potential upside of 14.00%. GDS has a consensus target price of $48.12, suggesting a potential upside of 45.32%. Given GDS’s stronger consensus rating and higher possible upside, analysts plainly believe GDS is more favorable than International Business Machines.

Profitability

This table compares International Business Machines and GDS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Business Machines	15.52%	35.65%	7.54%
GDS	30.70%	17.94%	6.11%

Insider & Institutional Ownership

59.0% of International Business Machines shares are owned by institutional investors. Comparatively, 33.7% of GDS shares are owned by institutional investors. 0.3% of International Business Machines shares are owned by insiders. Comparatively, 8.0% of GDS shares are owned 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.

Valuation & Earnings

This table compares International Business Machines and GDS”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Business Machines	$67.53 billion	3.24	$10.59 billion	$11.27	20.64
GDS	$1.63 billion	4.06	$132.10 million	$2.15	15.40

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

Risk and Volatility

International Business Machines has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, GDS has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500.

Summary

International Business Machines beats GDS on 9 of the 15 factors compared between the two stocks.

About International Business Machines

International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. The company operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry. The Infrastructure segment provides on-premises and cloud based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment. The Financing segment offers client and commercial financing, facilitates IBM clients’ acquisition of hardware, software, and services. The company has a strategic partnership to various companies including hyperscalers, service providers, global system integrators, and software and hardware vendors that includes Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

About GDS

GDS Holdings Limited, together with its subsidiaries, develops and operates data centers in the People's Republic of China. The company provides colocation services comprising critical facilities space, customer-available power, racks, and cooling; managed hosting services, including business continuity and disaster recovery, network management, data storage, system security, operating system, database, and server middleware services; managed cloud services; and consulting services. It serves cloud service providers, large Internet companies, financial institutions, telecommunications and IT service providers, and large domestic private sector and multinational corporations. GDS Holdings Limited was founded in 2001 and is headquartered in Shanghai, the People's Republic of China.