Comparing StarTek (SRT) & DLH (DLHC)

StarTek (NYSE:SRT) and DLH (NASDAQ:DLHC) are both small-cap business services companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, institutional ownership, profitability, analyst recommendations and dividends.

Profitability

This table compares StarTek and DLH’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
StarTek -6.49% -16.48% -7.52%
DLH 0.85% 12.54% 6.75%

Analyst Ratings

This is a summary of current ratings for StarTek and DLH, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
StarTek 0 2 1 0 2.33
DLH 0 0 2 0 3.00

StarTek presently has a consensus target price of $12.67, indicating a potential upside of 96.08%. DLH has a consensus target price of $7.63, indicating a potential upside of 25.83%. Given StarTek’s higher possible upside, equities research analysts clearly believe StarTek is more favorable than DLH.

Institutional and Insider Ownership

14.5% of StarTek shares are held by institutional investors. Comparatively, 57.5% of DLH shares are held by institutional investors. 17.8% of StarTek shares are held by company insiders. Comparatively, 25.9% of DLH shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares StarTek and DLH’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
StarTek $292.60 million 0.82 -$1.27 million ($0.08) -80.75
DLH $115.66 million 0.62 $3.28 million $0.27 22.44

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

Risk & Volatility

StarTek has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500. Comparatively, DLH has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500.

Summary

DLH beats StarTek on 11 of the 14 factors compared between the two stocks.

About StarTek

StarTek, Inc. operates as a customer engagement business process outsourcing services provider that delivers contact center and customer engagement solutions. It offers technical and product support, sales support, provisioning and order processing, receivables management, healthcare services, up-sell and cross-sell program, and customer intelligence analytics; and additional services, such as technology enabled and human interaction to other industry-specific processes, including training curriculum development, workforce management, customer analytics, quality monitoring services, and dispositions. The company serves client programs using a variety of multi-channel customer interaction capabilities, including voice, chat, email, social media, interactive voice response, and back-office support. It operates engagement centers in the United States, Canada, Honduras, Jamaica, and the Philippines. The company was founded in 1987 and is headquartered in Greenwood Village, Colorado.

About DLH

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.

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