Comparing Sterling Check (NASDAQ:STER) and StoneCo (NASDAQ:STNE)

Sterling Check (NASDAQ:STER) and StoneCo (NASDAQ:STNE) are both business services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Valuation and Earnings

This table compares Sterling Check and StoneCo”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sterling Check	$719.64 million	2.28	-$120,000.00	($0.17)	-98.47
StoneCo	$12.35 billion	0.26	$318.89 million	$1.28	8.02

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

Profitability

This table compares Sterling Check and StoneCo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sterling Check	-2.07%	7.73%	3.94%
StoneCo	16.02%	13.92%	4.09%

Institutional & Insider Ownership

84.3% of Sterling Check shares are owned by institutional investors. Comparatively, 73.2% of StoneCo shares are owned by institutional investors. 9.9% of Sterling Check shares are owned by company insiders. Comparatively, 11.3% of StoneCo shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Sterling Check has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500. Comparatively, StoneCo has a beta of 2.29, suggesting that its share price is 129% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Sterling Check and StoneCo, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sterling Check	0	4	1	0	2.20
StoneCo	1	1	7	1	2.80

Sterling Check currently has a consensus target price of $16.75, suggesting a potential upside of 0.06%. StoneCo has a consensus target price of $16.89, suggesting a potential upside of 64.61%. Given StoneCo’s stronger consensus rating and higher probable upside, analysts clearly believe StoneCo is more favorable than Sterling Check.

Summary

StoneCo beats Sterling Check on 13 of the 15 factors compared between the two stocks.

About Sterling Check

Sterling Check Corp. provides technology-enabled background and identity verification services in the United States, Canada, Europe, the Middle East and Africa, and the Asia Pacific. The company offers identity verification services, such as telecom and device verification, identification document verification, facial recognition with biometric matching, social security number verification, and live video chat identification proofing; fingerprinting; background checks, including criminal record checks, sex offender registries, civil court records, motor vehicle and driving license records, executive investigations, credit reports, social media searches, and contingent workforce solutions; liens, judgments, and bankruptcies; and sanctions, risk, and compliance checks. It also provides credential verification services, which include employment verification, education verification, credential verification, professional reference checks, and department of transportation; drug and health screening; onboarding solutions, including Sterling I-9 that integrates a suite of screening and onboarding services and onboarding forms; and workforce, medical license, and motor vehicle records monitoring solutions. The company's services are delivered through its cloud-based technology platform that empowers organizations with real-time and data-driven insights to conduct and manage their employment screening programs. It serves a client base in a range of industries, such as healthcare, gig economy, financial and business services, industrials, retail, contingent, technology, media and entertainment, transportation and logistics, hospitality, education, and government. The company was formerly known as Sterling Ultimate Parent Corp. and changed its name to Sterling Check Corp. in August 2021. Sterling Check Corp. was founded in 1975 and is headquartered in Independence, Ohio.

About StoneCo

StoneCo Ltd. provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and sells solutions to brick-and-mortar and digital merchants through sales team. The company served small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands.