Critical Survey: Kelly Services (KELYB) and StarTek (SRT)

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

Institutional & Insider Ownership

0.0% of Kelly Services shares are held by institutional investors. Comparatively, 11.0% of StarTek shares are held by institutional investors. 93.1% of Kelly Services shares are held by company insiders. Comparatively, 17.8% of StarTek shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.4%. StarTek does not pay a dividend.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kelly Services 0 0 0 0 N/A
StarTek 0 1 0 0 2.00

StarTek has a consensus target price of $9.00, suggesting a potential upside of 19.21%. Given StarTek’s higher possible upside, analysts clearly believe StarTek is more favorable than Kelly Services.

Valuation & Earnings

This table compares Kelly Services and StarTek’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kelly Services $5.37 billion 0.16 $71.60 million N/A N/A
StarTek $292.60 million 0.96 -$1.27 million ($0.08) -94.38

Kelly Services has higher revenue and earnings than StarTek.

Profitability

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

Net Margins Return on Equity Return on Assets
Kelly Services 1.17% 7.45% 3.66%
StarTek -7.75% -6.88% -3.19%

Volatility & Risk

Kelly Services has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, StarTek has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Summary

Kelly Services beats StarTek on 8 of the 12 factors compared between the two stocks.

Kelly Services Company Profile

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company operates through three segments: Americas Staffing, Global Talent Solutions (GTS), and International Staffing. It provides trained employees for data entry, clerical, and administrative support roles across various industries; schools with instructional and non-instructional employees; support staff for seminars, sales, and trade shows; assemblers, quality control inspectors, and technicians for electronic assembly; maintenance workers, material handlers, and assemblers for light industrial works; scientists, and scientific and clinical research workforce solutions; engineering professionals across various disciplines, including aeronautical, chemical, civil/structural, electrical/instrumentation, environmental, industrial, mechanical, petroleum, pharmaceutical, quality, and telecommunications. The company also provides IT specialists across various disciplines; creative talent in the spectrum of creative services positions; corporate finance departments, accounting firms, and financial institutions with various levels of financial professionals; and legal professionals, including attorneys, paralegals, contract administrators, compliance specialists, and legal administrators. In addition, it provides chefs, porters, and hospitality representatives; and manual workers and semi-skilled professionals in various trade, non-trade, and operational positions. Further, the company provides centrally delivered staffing for large accounts; contingent workforce outsourcing, recruitment process outsourcing, business process outsourcing, and payroll process outsourcing services; contact center staffing solutions; and legal managed services, as well as executive placement, career transition/outplacement, and talent advisory services. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.

StarTek Company Profile

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.

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