Analyzing Innodata (NASDAQ:INOD) and Barrett Business Services (NASDAQ:BBSI)

Innodata (NASDAQ:INOD) and Barrett Business Services (NASDAQ:BBSI) are both small-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Insider & Institutional Ownership

30.7% of Innodata shares are owned by institutional investors. Comparatively, 86.8% of Barrett Business Services shares are owned by institutional investors. 11.8% of Innodata shares are owned by company insiders. Comparatively, 4.8% of Barrett Business Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Innodata and Barrett Business Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Innodata	14.66%	37.79%	20.92%
Barrett Business Services	2.77%	20.95%	6.11%

Earnings & Valuation

This table compares Innodata and Barrett Business Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Innodata	$251.66 million	7.56	$32.18 million	$1.32	41.93
Barrett Business Services	$1.24 billion	0.67	$54.45 million	$1.36	25.20

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Innodata and Barrett Business Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Innodata	0	2	1	1	2.75
Barrett Business Services	1	2	2	1	2.50

Innodata presently has a consensus target price of $130.00, suggesting a potential upside of 134.90%. Barrett Business Services has a consensus target price of $41.00, suggesting a potential upside of 19.62%. Given Innodata’s stronger consensus rating and higher probable upside, equities analysts plainly believe Innodata is more favorable than Barrett Business Services.

Volatility and Risk

Innodata has a beta of 2.88, suggesting that its stock price is 188% more volatile than the S&P 500. Comparatively, Barrett Business Services has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500.

Summary

Innodata beats Barrett Business Services on 9 of the 14 factors compared between the two stocks.

About Innodata

Innodata Inc. operates as a global data engineering company in the United States, the United Kingdom, the Netherlands, Canada, and internationally. The company operates through three segments: Digital Data Solutions (DDS), Synodex, and Agility. The DDS segment engages in the provision of artificial intelligence (AI) data preparation services; collecting or creating training data; annotating training data; and training AI algorithms for its customers, as well as AI model deployment and integration services. This segment also provides a range of data engineering support services, including data transformation, data curation, data hygiene, data consolidation, data extraction, data compliance, and master data management. The Synodex segment offers an industry platform that transforms medical records into useable digital data with its proprietary data models or client data models. The Agility segment provides an industry platform that offers marketing communications and public relations professionals to target and distribute content to journalists and social media influencers; and to monitor and analyze global news channels, such as print, web, radio, and TV, as well as social media channels. It serves banking, insurance, financial services, technology, digital retailing, and information/media sectors through its professional staff, senior management, and direct sales personnel. The company was formerly known as Innodata Isogen, Inc. and changed its name to Innodata Inc. in June 2012. Innodata Inc. was incorporated in 1988 and is headquartered in Ridgefield Park, New Jersey.

About Barrett Business Services

Barrett Business Services, Inc. provides business management solutions for small and mid-sized companies in the United States. The company develops a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry. It offers professional employer services under which it enters into a client services agreement to establish a co-employment relationship with each client company, assuming responsibility for payroll, payroll taxes, workers compensation coverage, and other administration functions for the client’s existing workforce. The company provides staffing and recruiting services, such as on-demand or short-term staffing assignment, contract staffing, direct placement, and long-term or indefinite-term on-site management services. It serves electronics manufacturers, light-manufacturing industries, agriculture-based companies, transportation and shipping enterprises, food processors, telecommunications companies, public utilities, general contractors in various construction-related fields, restaurant franchises, and professional services firms. Barrett Business Services, Inc. was incorporated in 1965 and is headquartered in Vancouver, Washington.