DLH (NASDAQ:DLHC) and Kelly Services (NASDAQ:KELYA) are both small-cap business services companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitability, valuation and institutional ownership.
Risk & Volatility
DLH has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500. Comparatively, Kelly Services has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.
Institutional and Insider Ownership
57.5% of DLH shares are held by institutional investors. Comparatively, 66.5% of Kelly Services shares are held by institutional investors. 25.9% of DLH shares are held by company insiders. Comparatively, 12.1% of Kelly Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares DLH and Kelly Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.3%. DLH does not pay a dividend. Kelly Services pays out 13.6% of its earnings in the form of a dividend. Kelly Services has increased its dividend for 3 consecutive years.
This is a summary of recent recommendations and price targets for DLH and Kelly Services, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DLH presently has a consensus target price of $7.63, suggesting a potential upside of 39.40%. Kelly Services has a consensus target price of $37.00, suggesting a potential upside of 64.30%. Given Kelly Services’ higher possible upside, analysts clearly believe Kelly Services is more favorable than DLH.
Earnings and Valuation
This table compares DLH and Kelly Services’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DLH||$115.66 million||0.56||$3.28 million||$0.27||20.26|
|Kelly Services||$5.37 billion||0.16||$71.59 million||$2.20||10.24|
Kelly Services has higher revenue and earnings than DLH. Kelly Services is trading at a lower price-to-earnings ratio than DLH, indicating that it is currently the more affordable of the two stocks.
Kelly Services beats DLH on 9 of the 15 factors compared between the two stocks.
DLH Holdings Corp. provides healthcare and social services in the United States. It offers defense and veterans' health solutions, including case management, physical and behavioral health examinations, and medical administration and logistics services. The company also provides a range of human services and solutions, which consists of educational and environmental support services for the underserved children and youth comprising health, nutritional, parental, and behavioral services; and IT system architecture design, migration plan, and ongoing maintenance services. In addition, it offers public health and life sciences services, such as disease prevention; and health promotion to underserved and hard to reach at-risk communities through development of strategic communication campaigns, research on emerging trends, health informatics analyses, and application of best practices. The company offers its services to government agencies and other government clients. The company was formerly known as TeamStaff, Inc. and changed its name to DLH Holdings Corp. in June 2012. DLH Holdings Corp. was founded in 1969 and is headquartered in Atlanta, Georgia.
About Kelly Services
Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company operates through three segments: Americas Staffing, Global Talent Solutions (GTS), and International Staffing. It provides trained employees for data entry, clerical, and administrative support roles across various industries; schools with instructional and non-instructional employees; support staff for seminars, sales, and trade shows; assemblers, quality control inspectors, and technicians for electronic assembly; maintenance workers, material handlers, and assemblers for light industrial works; scientists, and scientific and clinical research workforce solutions; engineering professionals across various disciplines, including aeronautical, chemical, civil/structural, electrical/instrumentation, environmental, industrial, mechanical, petroleum, pharmaceutical, quality, and telecommunications. The company also provides IT specialists across various disciplines; creative talent in the spectrum of creative services positions; corporate finance departments, accounting firms, and financial institutions with various levels of financial professionals; and legal professionals, including attorneys, paralegals, contract administrators, compliance specialists, and legal administrators. In addition, it provides chefs, porters, and hospitality representatives; and manual workers and semi-skilled professionals in various trade, non-trade, and operational positions. Further, the company provides centrally delivered staffing for large accounts; contingent workforce outsourcing, recruitment process outsourcing, business process outsourcing, and payroll process outsourcing services; contact center staffing solutions; and legal managed services, as well as executive placement, career transition/outplacement, and talent advisory services. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.
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