Reviewing Trueblue (TBI) & StarTek (SRT)

Trueblue (NYSE: TBI) 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 earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Trueblue 2.21% 13.30% 6.59%
StarTek -0.44% -2.68% -1.30%

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trueblue $2.51 billion 0.45 $55.45 million $1.74 15.69
StarTek $292.60 million 0.51 -$1.27 million ($0.08) -116.63

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Trueblue and StarTek, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trueblue 0 2 0 0 2.00
StarTek 0 2 1 0 2.33

Trueblue presently has a consensus target price of $27.50, indicating a potential upside of 0.73%. StarTek has a consensus target price of $12.67, indicating a potential upside of 35.76%. Given StarTek’s stronger consensus rating and higher possible upside, analysts clearly believe StarTek is more favorable than Trueblue.

Risk & Volatility

Trueblue has a beta of 2.14, meaning that its share price is 114% more volatile than the S&P 500. Comparatively, StarTek has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500.

Institutional & Insider Ownership

94.7% of Trueblue shares are held by institutional investors. Comparatively, 42.1% of StarTek shares are held by institutional investors. 2.0% of Trueblue 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 is poised for long-term growth.

Summary

Trueblue beats StarTek on 9 of the 14 factors compared between the two stocks.

Trueblue Company Profile

TrueBlue, Inc. provides contingent staffing, recruitment process outsourcing, and contingent staffing management services in the United States, Canada, and Puerto Rico. It operates through three segments: PeopleReady, PeopleManagement, and PeopleScout. The PeopleReady segment offers a range of staffing solutions for blue-collar, contingent on-demand, and skilled labor in construction, manufacturing and logistics, warehousing and distribution, waste and recycling, hospitality, general labor, and other industries under the Labor Ready, CLP Resources, and Spartan Staffing brands. The PeopleManagement segment provides contingent labor and outsourced industrial workforce solutions. It offers outsourced recruitment and on-premise management services, temporary skilled mechanics and technicians for the aviation and transportation industries, and temporary and dedicated drivers for the transportation and distribution industries under Staff Management, SIMOS Insourcing Solutions, PlaneTechs, and Centerline Drivers brands. The PeopleScout segment offers permanent employee recruitment process outsourcing services; and manages customers' contingent labor programs comprising vendor selection, performance management, compliance monitoring, and risk management. The company was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. TrueBlue, Inc. was founded in 1985 and is headquartered in Tacoma, Washington.

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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