Critical Analysis: KBR (NYSE:KBR) & Recruit (OTCMKTS:RCRUY)

Recruit (OTCMKTS:RCRUY) and KBR (NYSE:KBR) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Dividends

Recruit pays an annual dividend of $0.01 per share and has a dividend yield of 0.0%. KBR pays an annual dividend of $0.66 per share and has a dividend yield of 1.8%. Recruit pays out 1.9% of its earnings in the form of a dividend. KBR pays out 19.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. KBR has raised its dividend for 6 consecutive years. KBR is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Recruit and KBR”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Recruit	$24.56 billion	6.17	$3.28 billion	$0.52	39.60
KBR	$7.79 billion	0.61	$415.00 million	$3.32	11.35

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

Institutional and Insider Ownership

97.0% of KBR shares are owned by institutional investors. 1.1% of KBR shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Recruit and KBR, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Recruit	0	1	0	0	2.00
KBR	1	4	3	0	2.25

KBR has a consensus price target of $46.67, indicating a potential upside of 23.79%. Given KBR’s stronger consensus rating and higher probable upside, analysts clearly believe KBR is more favorable than Recruit.

Risk & Volatility

Recruit has a beta of 1.7, indicating that its stock price is 70% more volatile than the S&P 500. Comparatively, KBR has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.

Profitability

This table compares Recruit and KBR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Recruit	14.94%	36.40%	21.05%
KBR	5.49%	32.55%	7.62%

Summary

Recruit beats KBR on 9 of the 17 factors compared between the two stocks.

About Recruit

Recruit Holdings Co., Ltd. provides HR technology and business solutions that transforms the world of work. It operates through three segments: HR Technology, Matching & Solutions, and Staffing. The HR Technology segment provides various technological solutions that help job seekers and employers in navigating hiring and recruitment. The Matching & Solutions segment offers HR solutions that support business clients’ recruiting and hiring activities and individual users’ job search activities through its job advertising services and placement services. This segment also provides marketing solutions that provide matching platforms for businesses in various industries, including housing and real estate, beauty, bridal, travel, dining, and others, as well as SaaS solutions, which are business and management support tools for small and medium-sized companies. The Staffing segment provides temporary staffing services in Japan, Europe, the United States, and Australia. Recruit Holdings Co., Ltd. operates in more than 60 countries. The company was formerly known as Recruit Co., Ltd. and changed its name to Recruit Holdings Co., Ltd. in October 2012. Recruit Holdings Co., Ltd. was founded in 1960 and is headquartered in Tokyo, Japan.

About KBR

KBR, Inc. provides scientific, technology, and engineering solutions to governments and commercial customers worldwide. It operates through Government Solutions and Sustainable Technology Solutions segments. The Government Solutions segment offers life-cycle support solutions to defense, intelligence, space, aviation, and other programs and missions for military and other government agencies in the United States, the United Kingdom, and Australia. Its services cover research and development, advanced prototyping, acquisition support, systems engineering, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, and operations readiness and support, as well as command, control, communications, computers, intelligence, surveillance, and reconnaissance services. This segment also provides various professional advisory services to the defense, renewable energy, and critical infrastructure sectors. The Sustainable Technology Solutions segment operates portfolio of various proprietary process technologies for ammonia/syngas, chemical/petrochemicals, clean refining, and circular process/circular economy solutions. This segment also provides synergistic services, including advisory and consulting focused on broad-based energy transition and net-zero carbon emission solutions; high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization; and digitally-enabled operating and monitoring solutions. KBR, Inc. was founded in 1901 and is headquartered in Houston, Texas.