Critical Review: RCM Technologies (NASDAQ:RCMT) versus Verra Mobility (NASDAQ:VRRM)

Verra Mobility (NASDAQ:VRRM) and RCM Technologies (NASDAQ:RCMT) are both small-cap industrials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Valuation & Earnings

This table compares Verra Mobility and RCM Technologies”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Verra Mobility	$979.08 million	0.72	$136.63 million	$0.26	17.88
RCM Technologies	$319.40 million	0.89	$16.33 million	$2.30	17.46

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

Insider and Institutional Ownership

43.2% of RCM Technologies shares are owned by institutional investors. 1.3% of Verra Mobility shares are owned by insiders. Comparatively, 28.0% of RCM Technologies 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.

Volatility & Risk

Verra Mobility has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500. Comparatively, RCM Technologies has a beta of 0.29, meaning that its stock price is 71% less volatile than the S&P 500.

Profitability

This table compares Verra Mobility and RCM Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Verra Mobility	4.40%	64.39%	11.46%
RCM Technologies	5.13%	37.92%	12.83%

Analyst Recommendations

This is a summary of current ratings and price targets for Verra Mobility and RCM Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Verra Mobility	1	9	0	0	1.90
RCM Technologies	0	2	2	0	2.50

Verra Mobility presently has a consensus price target of $7.00, indicating a potential upside of 50.54%. RCM Technologies has a consensus price target of $45.00, indicating a potential upside of 12.05%. Given Verra Mobility’s higher probable upside, research analysts clearly believe Verra Mobility is more favorable than RCM Technologies.

Summary

RCM Technologies beats Verra Mobility on 8 of the 14 factors compared between the two stocks.

About Verra Mobility

Verra Mobility Corporation provides smart mobility technology solutions and services in the United States, Australia, Canada, and Europe. It operates through three segments: Commercial Services, Government Solutions, and Parking Solutions. The Commercial Services segment provides automated toll and violations management, and title and registration services to rental car companies, fleet management companies, and other large fleet owners. The Government Solutions segment offers automated safety solutions to national, state, and local government agencies, including services and technologies that enable photo enforcement through road safety cameras to detect and process traffic violations for red-light, speed, school bus, and city bus lanes. This segment serves municipalities, counties, school districts, and law enforcement agencies. The Parking Solutions segment provides an integrated suite of parking software and hardware solutions to universities, municipalities, parking operators, healthcare facilities, and transportation hubs. Verra Mobility Corporation was incorporated in 2016 and is headquartered in Mesa, Arizona.

About RCM Technologies

RCM Technologies, Inc. provides business and technology solutions in the United States, Canada, Puerto Rico, and Europe. It operates through three segments: Engineering, Specialty Health Care, and Life Sciences and Information Technology. The Engineering segment offers a range of engineering services, including project management engineering and design, engineering analysis, engineer-procure-construct, configuration management, hardware/software validation and verification, quality assurance, technical writing and publications, manufacturing process planning and improvement, and 3D/BIM integrated design. The Specialty Health Care segment provides long-term and short-term staffing, executive search, international recruitment, and placement services in the fields of allied and therapy staffing, correctional healthcare staffing, health information management, nursing services, physician and advanced practice, school staffing and recruitment, and telepractice. The Life Sciences and Information Technology segment offers enterprise business solutions, application services, IT infrastructure solutions, life sciences solutions, and other vertical market specific solutions; and data solutions, digitization, recruiting process outsourcing, human capital management solutions, workforce management, and consulting services. The company serves aerospace and defense, energy, financial services, health care, life sciences, manufacturing and distribution, and technology industries, as well as educational institutions and the public sector. RCM Technologies, Inc. was founded in 1971 and is based in Pennsauken, New Jersey.