Critical Analysis: MillerKnoll (NASDAQ:MLKN) versus Healthcare Services Group (NASDAQ:HCSG)

MillerKnoll (NASDAQ:MLKN) and Healthcare Services Group (NASDAQ:HCSG) are both small-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitability, dividends, risk and institutional ownership.

Profitability

This table compares MillerKnoll and Healthcare Services Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MillerKnoll	2.38%	9.77%	3.25%
Healthcare Services Group	6.59%	18.97%	11.96%

Analyst Ratings

This is a breakdown of recent recommendations for MillerKnoll and Healthcare Services Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MillerKnoll	0	2	1	0	2.33
Healthcare Services Group	0	2	6	1	2.89

Healthcare Services Group has a consensus target price of $26.50, indicating a potential upside of 20.29%. Given Healthcare Services Group’s stronger consensus rating and higher possible upside, analysts clearly believe Healthcare Services Group is more favorable than MillerKnoll.

Insider and Institutional Ownership

87.5% of MillerKnoll shares are held by institutional investors. Comparatively, 98.0% of Healthcare Services Group shares are held by institutional investors. 5.5% of MillerKnoll shares are held by insiders. Comparatively, 2.9% of Healthcare Services Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares MillerKnoll and Healthcare Services Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MillerKnoll	$3.84 billion	0.39	$91.50 million	$1.32	16.40
Healthcare Services Group	$1.84 billion	0.82	$59.06 million	$1.72	12.81

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

Risk and Volatility

MillerKnoll has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Healthcare Services Group has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Summary

Healthcare Services Group beats MillerKnoll on 10 of the 15 factors compared between the two stocks.

About MillerKnoll

MillerKnoll, Inc. researches, designs, manufactures, and distributes interior furnishings worldwide. It operates through three segments: Americas Contract, International Contract & Specialty, and Global Retail. The company also provides seating products, furniture systems, other freestanding furniture elements, textiles, leather, felt, home furnishings and related services, casegoods, storage products, as well as residential, education, and healthcare furniture solutions. It offers its products under the MillerKnoll, Herman Miller, Herman Miller Circled Symbolic M, Knoll, Maharam, Geiger, Design Within Reach, DWR, HAY, NaughtOne, Nemschoff, Aeron, Mirra, Embody, Setu, Sayl, Cosm, Caper, Eames, Knoll, KnollExtra, Knoll Luxe, KnollStudio, KnollTextiles, Edelman Leather, Spinneybeck Leather, Generation by Knoll, Regeneration by Knoll, MultiGeneration by Knoll, Remix, Holly Hunt, Vladimir Kagan, Muuto, Barcelona, and Womb names. The company offers its products through independent contract furniture dealers, direct contract sales, e-commerce websites, and wholesale and retail stores. Its products are used in institutional, health/science, and residential and other environments, and industrial and educational settings, as well as transportation terminals. The company was formerly known as Herman Miller, Inc. and changed its name to MillerKnoll, Inc. in November 2021. MillerKnoll, Inc. was incorporated in 1905 and is headquartered in Zeeland, Michigan.

About Healthcare Services Group

Healthcare Services Group, Inc. provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments of nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of resident rooms and common areas of the customers' facilities, as well as laundering and processing of the bed linens, uniforms, resident personal clothing, and other assorted linen items utilized at the customers' facilities. The Dietary segment provides food purchasing, meal preparation, and professional dietitian services, which include the development of menus that meet the dietary needs of residents; and on-site management and clinical consulting services to facilities. It serves long-term and post-acute care facilities, hospitals, and the healthcare industry through referrals and solicitation of target facilities. The company was incorporated in 1976 and is based in Bensalem, Pennsylvania.