Reviewing DLH (NASDAQ:DLHC) and LegalZoom.com (NASDAQ:LZ)

DLH (NASDAQ:DLHC) and LegalZoom.com (NASDAQ:LZ) are both small-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for DLH and LegalZoom.com, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DLH	2	0	1	0	1.67
LegalZoom.com	3	5	0	0	1.62

LegalZoom.com has a consensus target price of $7.30, indicating a potential upside of 21.67%. Given LegalZoom.com’s higher probable upside, analysts clearly believe LegalZoom.com is more favorable than DLH.

Insider & Institutional Ownership

67.2% of DLH shares are owned by institutional investors. Comparatively, 82.0% of LegalZoom.com shares are owned by institutional investors. 12.8% of DLH shares are owned by insiders. Comparatively, 7.4% of LegalZoom.com shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DLH	-8.51%	-10.42%	-4.04%
LegalZoom.com	2.13%	15.83%	5.08%

Volatility & Risk

DLH has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500. Comparatively, LegalZoom.com has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Valuation and Earnings

This table compares DLH and LegalZoom.com”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DLH	$344.50 million	0.19	$1.36 million	($1.48)	-3.02
LegalZoom.com	$792.49 million	1.30	$15.43 million	$0.09	66.67

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

Summary

LegalZoom.com beats DLH on 10 of the 14 factors compared between the two stocks.

About DLH

DLH Holdings Corp. provides technology-enabled business process outsourcing, program management solutions, and public health research and analytics services in the United States. It offers digital transformation and cyber security solutions, including artificial intelligence and machine learning, cloud enablement, cybersecurity ecosystem, big data analytics, and modeling and simulation to the National Institutes of Health (NIH), the Defense Health Agency, Tele-medicine and Advanced Technology Research Center, and US Navy Naval Information Warfare Center (NIWC). The company also provides science research and development services and solutions, such as data analytics, testing and evaluation, clinical trials research services, and epidemiology studies to support multiple operating divisions, including NIH and the Center for Disease Control and Prevention, as well as the Military Health System. In addition, it offers system engineering and integration solutions in the areas of pharmaceutical delivery logistics, fire protection engineering, biomedical equipment, and technology engineering on behalf of the Department of Veterans Affairs, NIWC, Health and Human Services, and other federal customers. The company also provides business process management services under the trademarks, e-PRAT and SPOT-m, as well as the registered trademark, Infinibyte for cloud-based solutions. The company was formerly known as TeamStaff, Inc. and changed its name to DLH Holdings Corp. in June 2012. DLH Holdings Corp. was incorporated in 1969 and is headquartered in Atlanta, Georgia.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.