Contrasting Xylem (NYSE:XYL) & Montrose Environmental Group (NYSE:MEG)

Montrose Environmental Group (NYSE:MEG) and Xylem (NYSE:XYL) are both business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Institutional and Insider Ownership

87.9% of Montrose Environmental Group shares are owned by institutional investors. Comparatively, 88.0% of Xylem shares are owned by institutional investors. 11.2% of Montrose Environmental Group shares are owned by insiders. Comparatively, 0.3% of Xylem shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Montrose Environmental Group and Xylem”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Montrose Environmental Group	$696.40 million	1.30	-$62.31 million	($0.91)	-28.14
Xylem	$8.89 billion	3.87	$890.00 million	$3.89	36.34

Xylem has higher revenue and earnings than Montrose Environmental Group. Montrose Environmental Group is trading at a lower price-to-earnings ratio than Xylem, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Montrose Environmental Group and Xylem, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Montrose Environmental Group	1	2	4	0	2.43
Xylem	0	6	8	0	2.57

Montrose Environmental Group presently has a consensus target price of $34.40, suggesting a potential upside of 34.34%. Xylem has a consensus target price of $166.90, suggesting a potential upside of 18.07%. Given Montrose Environmental Group’s higher possible upside, equities research analysts plainly believe Montrose Environmental Group is more favorable than Xylem.

Volatility and Risk

Montrose Environmental Group has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500. Comparatively, Xylem has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500.

Profitability

This table compares Montrose Environmental Group and Xylem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Montrose Environmental Group	-2.52%	0.17%	0.08%
Xylem	10.66%	10.77%	6.98%

Summary

Xylem beats Montrose Environmental Group on 11 of the 14 factors compared between the two stocks.

About Montrose Environmental Group

Montrose Environmental Group, Inc. operates as an environmental services company in the United States, Canada, and internationally. The company operates in three segments: Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse. The Assessment, Permitting and Response segment provides scientific advisory and consulting services to support environmental assessments; environmental emergency response and recovery; toxicology consulting and environmental audits and permits for current operations; facility upgrades; new projects; decommissioning projects; and development projects. This segment also offers technical advisory and consulting services, including regulatory compliance support and planning, environmental, ecosystem and toxicological assessments, and support during responses to environmental disruptions. The Measurement and Analysis segment tests and analyzes air, water, and soil to determine concentrations of contaminants, as well as the toxicological impact of contaminants on flora, fauna, and human health. Its services include source and ambient air testing and monitoring, leak detection, and advanced analytical laboratory services, such as storm water, wastewater, and drinking water analysis. The Remediation and Reuse segment provides engineering, design, implementation, and operations and maintenance services primarily to treat contaminated water, remove contaminants from soil, or create biogas from waste. The company serves financial, oil and gas, utilities, construction, automotive, real-estate, midstream energy, manufacturing, commodities, petrochemical, food and beverage, telecommunications, and engineering industries, as well as local, state, provincial, and federal government entities. Montrose Environmental Group, Inc. was founded in 2012 and is headquartered in North Little Rock, Arkansas.

About Xylem

Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions worldwide. It operates through four segments: Water Infrastructure, Applied Water, Measurement & Control Solutions, and Integrated Solutions and Services. The Water Infrastructure segment offers products, including water, storm water, and wastewater pumps; controls and systems; filtration, disinfection, and biological treatment equipment; and mobile dewatering equipment and rental services under the ADI, Flygt, Godwin, Sanitaire, Magneto, Neptune Benson, Ionpure, Leopold, Wedeco, and Xylem Vue brands. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, Xylem Vue, and Flojet brands. The Measurement & Control Solutions segment offers smart meters, networked communication devices, data analytics, test equipment, controls, sensor devices, software and managed services, and critical infrastructure services; and software and services, including cloud-based analytics, remote monitoring and data management, leak detection, condition assessment, asset management, and pressure monitoring solutions, as well as testing equipment. This segment sells its products under the Pure Technologies, Sensus, Smith Blair, WTW, Xylem Vue, and YSI brands. The Integrated Solutions and Services segment provides maintenance services, mobile services, digital outsourced solutions, wastewater systems, environmental remediation, odor and corrosion control, filtration, reverse osmosis, ion exchange, and deionization under Aquapro, WaterOne, and Ion Pure brands. Xylem Inc. was formerly known as ITT WCO, Inc. and changed its name to Xylem Inc. in May 2011. Xylem Inc. was incorporated in 2011 and is headquartered in Washington, District of Columbia.