Financial Comparison: Barrett Business Services (NASDAQ:BBSI) & Exponent (NASDAQ:EXPO)

Exponent (NASDAQ:EXPO) and Barrett Business Services (NASDAQ:BBSI) are both industrials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Insider and Institutional Ownership

92.4% of Exponent shares are owned by institutional investors. Comparatively, 86.8% of Barrett Business Services shares are owned by institutional investors. 1.7% of Exponent shares are owned by insiders. Comparatively, 4.8% of Barrett Business Services shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Exponent and Barrett Business Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Exponent	0	2	2	0	2.50
Barrett Business Services	0	2	2	1	2.80

Exponent currently has a consensus price target of $81.00, suggesting a potential upside of 19.40%. Barrett Business Services has a consensus price target of $41.50, suggesting a potential upside of 3.54%. Given Exponent’s higher probable upside, equities research analysts plainly believe Exponent is more favorable than Barrett Business Services.

Valuation & Earnings

This table compares Exponent and Barrett Business Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Exponent	$582.01 million	5.65	$106.01 million	$2.23	30.42
Barrett Business Services	$1.24 billion	0.79	$54.45 million	$1.54	26.03

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

Dividends

Exponent pays an annual dividend of $1.24 per share and has a dividend yield of 1.8%. Barrett Business Services pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Exponent pays out 55.6% of its earnings in the form of a dividend. Barrett Business Services pays out 20.8% 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. Exponent has raised its dividend for 12 consecutive years and Barrett Business Services has raised its dividend for 1 consecutive years. Exponent is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Exponent	17.67%	31.48%	15.53%
Barrett Business Services	3.24%	22.89%	6.84%

Volatility & Risk

Exponent has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Barrett Business Services has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Summary

Exponent beats Barrett Business Services on 11 of the 17 factors compared between the two stocks.

About Exponent

Exponent, Inc., together with its subsidiaries, operates as a science and engineering consulting company in the United States and internationally. The company operates in two segments, Engineering and Other Scientific, and Environmental and Health. The Engineering and Other Scientific segment provides services in the areas of biomechanics, biomedical engineering and sciences, buildings and structures, civil engineering, construction consulting, data sciences, electrical engineering and computer science, human factors, materials and corrosion engineering, mechanical engineering, polymer science and materials chemistry, thermal sciences, and vehicle engineering. The Environmental and Health segment offers services in the areas of chemical regulation and food safety, ecological and biological sciences, environmental and earth sciences, and health sciences. The company offers approximately 90 technical disciplines to solve pressing and complicated challenges facing stakeholders. It serves clients in chemical, construction, consumer products, energy, food, beverage and nutrition, government, life sciences, insurance, manufacturing, technology, industrial equipment, transportation, and other sectors of the economy. The company was formerly known as The Failure Group, Inc. and changed its name to Exponent, Inc. in 1998. The company was founded in 1967 and is headquartered in Menlo Park, California.

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.