Financial Analysis: Xylem (NYSE:XYL) vs. ARQ (NASDAQ:ARQ)

ARQ (NASDAQ:ARQ) and Xylem (NYSE:XYL) are both business services companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Institutional & Insider Ownership

18.5% of ARQ shares are owned by institutional investors. Comparatively, 88.0% of Xylem shares are owned by institutional investors. 23.9% of ARQ shares are owned by insiders. Comparatively, 0.3% of Xylem shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for ARQ and Xylem, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARQ	2	0	2	1	2.40
Xylem	0	5	8	0	2.62

ARQ presently has a consensus target price of $9.00, indicating a potential upside of 177.78%. Xylem has a consensus target price of $167.40, indicating a potential upside of 20.41%. Given ARQ’s higher probable upside, analysts clearly believe ARQ is more favorable than Xylem.

Profitability

This table compares ARQ and Xylem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARQ	-3.33%	-1.11%	-0.86%
Xylem	10.66%	10.77%	6.98%

Valuation & Earnings

This table compares ARQ and Xylem”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARQ	$108.96 million	1.27	-$5.11 million	($0.10)	-32.40
Xylem	$8.56 billion	3.95	$890.00 million	$3.89	35.74

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

Volatility and Risk

ARQ has a beta of 1.95, meaning that its stock price is 95% more volatile than the S&P 500. Comparatively, Xylem has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Summary

Xylem beats ARQ on 11 of the 15 factors compared between the two stocks.

About ARQ

Arq, Inc. is a holding company. It engages in the provision of environmental and emission control equipment to the power generation industry. The company operates through the following Segments: Refined Coal and Advanced Purification Technologies. The Refined Coal segment includes the Tinuum Group, Tinuum Services, and GWN Manager. The Advanced Purification Technologies segment refers to the sale of Activated Carbon Injection and Dry Sorbent Injection equipment systems, chemical sales, consulting services, and other sales related to the reduction of emissions in the coal-fired electric generation process and the electric utility industry. The company was founded in 1996 and is headquartered in Greenwood Village, CO.

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.