Critical Review: Barrett Business Services (BBSI) and On Assignment (ASGN)

Barrett Business Services (NASDAQ: BBSI) and On Assignment (NYSE:ASGN) are both business services companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Institutional & Insider Ownership

78.0% of Barrett Business Services shares are held by institutional investors. Comparatively, 93.9% of On Assignment shares are held by institutional investors. 6.0% of Barrett Business Services shares are held by company insiders. Comparatively, 5.4% of On Assignment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Barrett Business Services has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, On Assignment has a beta of 1.89, meaning that its share price is 89% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Barrett Business Services and On Assignment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barrett Business Services 0 0 1 0 3.00
On Assignment 0 1 6 0 2.86

Barrett Business Services presently has a consensus price target of $105.00, indicating a potential upside of 18.74%. On Assignment has a consensus price target of $77.83, indicating a potential downside of 8.82%. Given Barrett Business Services’ stronger consensus rating and higher possible upside, analysts plainly believe Barrett Business Services is more favorable than On Assignment.

Profitability

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

Net Margins Return on Equity Return on Assets
Barrett Business Services 2.73% 34.14% 3.95%
On Assignment 6.00% 17.42% 9.11%

Dividends

Barrett Business Services pays an annual dividend of $1.00 per share and has a dividend yield of 1.1%. On Assignment does not pay a dividend. Barrett Business Services pays out 30.0% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Barrett Business Services and On Assignment’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barrett Business Services $920.43 million 0.70 $25.17 million $3.33 26.56
On Assignment $2.63 billion 1.70 $157.67 million $3.05 27.99

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

Summary

On Assignment beats Barrett Business Services on 10 of the 16 factors compared between the two stocks.

About Barrett Business Services

Barrett Business Services, Inc. provides business management solutions for small and medium-sized companies in the United States. The company has 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 certain other administration functions for the client's existing workforce. The company also provides staffing and recruiting services, such as on-demand or short-term staffing assignments, contract staffing, direct placement, long-term or indefinite-term on-site management. It serves electronics manufacturers, various light-manufacturing industries, agriculture-based companies, transportation and shipping enterprises, food processors, telecommunications companies, public utilities, general contractors in various construction-related fields, and professional services firms. Barrett Business Services, Inc. was founded in 1965 and is headquartered in Vancouver, Washington.

About On Assignment

ASGN Incorporated provides IT and professional services in the technology, digital, creative, healthcare technology, engineering, life sciences, and government sectors in the United States, Europe, and Canada. The company's Apex segment offers technical, digital, and creative and scientific professionals for contract, contract-to-hire, and permanent placement positions to Fortune 1000 and mid-market clients; IT staffing and consulting services comprising IT infrastructure, application development, project management, and healthcare IT professionals; and creative, marketing, advertising, and digital professionals. It also provides scientific, engineering, and clinical research staffing and services for temporary and permanent assignments, such as chemists, clinical research associates, clinical lab assistants, engineers, biologists, biochemists, microbiologists, molecular biologists, biostatisticians, drug safety specialists, SAS programmers, medical writers, food scientists, regulatory affairs specialists, lab assistants, and other skilled professionals. This segment serves companies from various industries, as well as advertising agencies and company marketing departments. Its Oxford segment recruits and delivers experienced IT, engineering, and regulatory and compliance consultants to clients for temporary assignments and project engagements; provides permanent placements in technology, engineering, sales, executive, financial, accounting, scientific, legal, and operations positions; and offers locally-based contract and permanent life science professionals to clients with research and development projects. The company's ECS segment delivers solutions in cloud, cybersecurity, software development, IT modernization, and science and engineering. The company was formerly known as On Assignment, Inc. and changed its name to ASGN Incorporated in April 2018. The company was founded in 1985 and is headquartered in Calabasas, California.

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