Genpact (NYSE:G) vs. LegalZoom.com (NASDAQ:LZ) Critical Analysis

Genpact (NYSE:G) and LegalZoom.com (NASDAQ:LZ) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Institutional & Insider Ownership

96.0% of Genpact shares are owned by institutional investors. Comparatively, 82.0% of LegalZoom.com shares are owned by institutional investors. 1.6% of Genpact shares are owned by insiders. Comparatively, 7.4% of LegalZoom.com shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Genpact and LegalZoom.com, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Genpact	0	7	2	0	2.22
LegalZoom.com	3	5	0	0	1.62

Genpact presently has a consensus target price of $39.33, suggesting a potential upside of 18.13%. LegalZoom.com has a consensus target price of $7.30, suggesting a potential upside of 30.36%. Given LegalZoom.com’s higher possible upside, analysts plainly believe LegalZoom.com is more favorable than Genpact.

Valuation & Earnings

This table compares Genpact and LegalZoom.com”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Genpact	$5.08 billion	1.10	$552.49 million	$3.37	9.88
LegalZoom.com	$756.04 million	1.27	$15.43 million	$0.09	62.22

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

Volatility & Risk

Genpact has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, LegalZoom.com has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Profitability

This table compares Genpact and LegalZoom.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Genpact	11.04%	23.34%	10.68%
LegalZoom.com	2.13%	15.83%	5.08%

Summary

Genpact beats LegalZoom.com on 9 of the 14 factors compared between the two stocks.

About Genpact

Genpact Limited provides business process outsourcing and information technology services in India, rest of Asia, North and Latin America, and Europe. It operates through three segments: Financial services; Consumer and Healthcare; and High Tech and Manufacturing. The Financial Services segment offers retail customer onboarding, customer service, collections, card servicing operations, loan and payment operations, commercial loan, equipment and auto loan, mortgage origination, compliance services, reporting and monitoring, and wealth management operations support; financial crime and risk management services; and underwriting support, new business processing, policy administration, claims management, catastrophe modeling and actuarial services, as well as property and casualty claims. The Consumer and Healthcare segment provides demand generation, sensing and planning, supply chain planning and management, pricing and trade promotion management, deduction recovery management, order management, and digital commerce; and end-to-end claim lifecycle management, from claims processing and adjudication to claims recovery and payment integrity, revenue cycle management, health equity analytics, and care services. The High Tech and Manufacturing segment offers industry-specific solutions for trust and safety, advertising sales support, customer and user experience, and customer care support; and direct and indirect procurement, logistics, field, aftermarket support, and engineering services. It also provides digital operation services; data-tech-Al services; finance and accounting services, such as accounts payable, invoice-to-cash, record to report, financial planning and analysis, and enterprise risk and compliance; CFO advisory services; supply chain, and sourcing and procurement services; sales and commercial, and marketing and experience services; and environmental, social and governance services. The company was founded in 1997 and is based in Hamilton, Bermuda.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.