Financial Contrast: Zeo Energy (NASDAQ:ZEO) & Stem (NYSE:STEM)

Zeo Energy (NASDAQ:ZEO) and Stem (NYSE:STEM) are both small-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.

Profitability

This table compares Zeo Energy and Stem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zeo Energy	-2.05%	-3.32%	-6.01%
Stem	-328.11%	-275.79%	-17.98%

Valuation & Earnings

This table compares Zeo Energy and Stem”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zeo Energy	$110.07 million	0.73	-$3.00 million	($1.39)	-1.17
Stem	$144.58 million	0.46	-$140.41 million	($5.26)	-0.08

Zeo Energy has higher earnings, but lower revenue than Stem. Zeo Energy is trading at a lower price-to-earnings ratio than Stem, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Zeo Energy and Stem, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zeo Energy	0	0	0	0	0.00
Stem	0	7	2	0	2.22

Stem has a consensus target price of $1.11, indicating a potential upside of 172.33%. Given Stem’s stronger consensus rating and higher possible upside, analysts clearly believe Stem is more favorable than Zeo Energy.

Insider & Institutional Ownership

61.6% of Stem shares are held by institutional investors. 4.2% of Zeo Energy shares are held by insiders. Comparatively, 10.2% of Stem shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Zeo Energy has a beta of -0.78, suggesting that its share price is 178% less volatile than the S&P 500. Comparatively, Stem has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500.

Summary

Stem beats Zeo Energy on 8 of the 14 factors compared between the two stocks.

About Zeo Energy

Zeo Energy Corp. provides residential solar energy systems, other energy efficient equipment, and related services in Florida, Texas, Arkansas, and Missouri, the United States. The company is involved in the selling and installing of residential solar energy systems that homeowners use electricity required to power their homes. Its residential solar energy systems comprise solar panels, inverters, and racking systems. It also offers insulation services, such as adding insulation to a home's attic or walls; energy efficiency equipment, including hybrid electric water heaters and swimming pool pumps; battery-based energy storage systems; and roofing services. Zeo Energy Corp. was founded in 2005 and is headquartered in New Port Richey, Florida.

About Stem

Stem, Inc. operates as a digitally connected, intelligent, and renewable energy storage network provider worldwide. The company offers energy storage hardware sourced from original equipment manufacturers (OEMs); edge hardware to aid in the collection of site data and real-time operation and control of the site and other optional equipment; and Athena, a software platform, which offers battery hardware and software-enabled services to operate the energy storage systems. It serves commercial and industrial enterprises, independent power producers, renewable project developers, and utilities and grid operators. The company was incorporated in 2009 and is headquartered in San Francisco, California.