Kforce (NASDAQ: KFRC) and StarTek (NYSE:SRT) are both small-cap business services companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.
Risk and Volatility
Kforce has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500. Comparatively, StarTek has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500.
This table compares Kforce and StarTek’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings and price targets for Kforce and StarTek, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Kforce presently has a consensus target price of $26.25, indicating a potential downside of 24.46%. StarTek has a consensus target price of $12.67, indicating a potential upside of 90.76%. Given StarTek’s stronger consensus rating and higher possible upside, analysts clearly believe StarTek is more favorable than Kforce.
Institutional and Insider Ownership
79.1% of Kforce shares are held by institutional investors. Comparatively, 37.5% of StarTek shares are held by institutional investors. 13.3% of Kforce shares are held by insiders. Comparatively, 17.8% of StarTek shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares Kforce and StarTek’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Kforce||$1.36 billion||0.67||$33.28 million||$1.57||22.13|
|StarTek||$292.60 million||0.37||-$1.27 million||($0.08)||-83.00|
Kforce has higher revenue and earnings than StarTek. StarTek is trading at a lower price-to-earnings ratio than Kforce, indicating that it is currently the more affordable of the two stocks.
Kforce pays an annual dividend of $0.48 per share and has a dividend yield of 1.4%. StarTek does not pay a dividend. Kforce pays out 30.6% of its earnings in the form of a dividend.
Kforce beats StarTek on 11 of the 15 factors compared between the two stocks.
Kforce Company Profile
Kforce Inc. provides professional staffing services and solutions in the United States and internationally. It operates through Technology (Tech), Finance and Accounting (FA), and Government Solutions (GS) segments. The Tech segment provides temporary staffing and permanent placement services to its clients primarily in the areas of information technology, such as systems/applications architecture and development, project management, enterprise data management, business intelligence, artificial intelligence, machine learning, network architecture, and security. This segment serves clients in various industries comprising financial services, communications, insurance services, and government sectors. The FA segment offers temporary staffing and permanent placement services to its clients in areas, such as general accounting, business analysis, accounts payable, accounts receivable, financial analysis and reporting, taxation, budget preparation and analysis, mortgage and loan processing, cost analysis, professional administration, outsourced functional support, credit and collections, audit services, and systems and controls analysis and documentation. This segment serves clients in various industries, including financial services, healthcare, and government sectors. The GS segment provides staffing services and solutions to the Federal Government as a prime and a subcontractor. It offers integrated business solutions to its clients in areas, such as information technology infrastructure transformation, healthcare informatics, data and knowledge management and analytics, research and development, audit readiness, financial management, and accounting. Kforce Inc. was founded in 1962 and is headquartered in Tampa, Florida.
StarTek Company Profile
StarTek, Inc. provides business process outsourcing services in the United States, Canada, Honduras, Jamaica, and the Philippines. It operates in three segments: Domestic, Nearshore, and Offshore. The company's service offerings include customer care, sales support, inbound sales, complex order processing, accounts receivable management, technical and product support, up-sell and cross-sell opportunities, customer intelligence analytics, and other industry-specific processes. It offers technical and product support services through telephone, e-mail, chat, facsimile, and Internet; and sales support services comprising lead generation, direct sales, account management and retention programs, and marketing analysis and modeling. The company's provisioning and order processing services comprise full life cycle order management and technical sales support for high-end telecommunications services, such as wire-line, wireless, data, and customer premise equipment; order fallout from its clients' automated systems, billing review, revenue recovery, and quality assurance; direct-to-consumer services, such as provisioning, order processing, and transfer of accounts between client service providers. Its receivables management services consist of first and third party collections services for clients in the telecommunication, cable and media, and healthcare industries; healthcare services include customer care, sales support, accounts receivable management, remote patient care, and medical triage to providers, payers, pharmaceutical, and medical devices; and industry-specific processes comprise training curriculum development, workforce management, customer analytics, quality monitoring services, and dispositions. The company was founded in 1987 and is headquartered in Greenwood Village, Colorado.
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