Contrasting Jacobs Solutions (NYSE:J) and Barrett Business Services (NASDAQ:BBSI)

Jacobs Solutions (NYSE:J) and Barrett Business Services (NASDAQ:BBSI) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

85.7% of Jacobs Solutions shares are owned by institutional investors. Comparatively, 86.8% of Barrett Business Services shares are owned by institutional investors. 0.5% of Jacobs Solutions shares are owned by insiders. Comparatively, 4.8% of Barrett Business Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Jacobs Solutions and Barrett Business Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Jacobs Solutions	0	6	5	0	2.45
Barrett Business Services	0	3	2	1	2.67

Jacobs Solutions currently has a consensus price target of $156.78, suggesting a potential upside of 8.05%. Barrett Business Services has a consensus price target of $41.00, suggesting a potential upside of 23.42%. Given Barrett Business Services’ stronger consensus rating and higher possible upside, analysts plainly believe Barrett Business Services is more favorable than Jacobs Solutions.

Dividends

Jacobs Solutions pays an annual dividend of $1.44 per share and has a dividend yield of 1.0%. Barrett Business Services pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Jacobs Solutions pays out 51.1% of its earnings in the form of a dividend. Barrett Business Services pays out 23.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Jacobs Solutions has increased its dividend for 4 consecutive years and Barrett Business Services has increased its dividend for 1 consecutive years. Jacobs Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Jacobs Solutions has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500. Comparatively, Barrett Business Services has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares Jacobs Solutions and Barrett Business Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Jacobs Solutions	$12.03 billion	1.42	$289.34 million	$2.82	51.45
Barrett Business Services	$1.27 billion	0.64	$54.45 million	$1.36	24.43

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

Profitability

This table compares Jacobs Solutions and Barrett Business Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Jacobs Solutions	2.40%	23.96%	7.02%
Barrett Business Services	2.77%	20.95%	6.11%

Summary

Jacobs Solutions beats Barrett Business Services on 10 of the 18 factors compared between the two stocks.

About Jacobs Solutions

Jacobs Solutions Inc. provides consulting, technical, engineering, scientific, and project delivery services for the government and private sectors in the United States, Europe, Canada, India, Asia, Australia, New Zealand, the Middle East, and Africa. It operates through Critical Mission Solutions, People & Places Solutions, Divergent Solutions, and PA Consulting segments. The company offers cyber, data analytics, systems and software application integration and consulting, enterprise level and mission IT, design, nuclear, and enterprise level operations and maintenance services; software development, testing, mission integration, program management, research, development, test, evaluation services, training, and environmental remediation services; and other technical consulting solutions, as well as construction and construction management services. It also provides consulting services for consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport industries. The company was founded in 1947 and is headquartered in Dallas, Texas.

About Barrett Business Services

Barrett Business Services, Inc. provides business management solutions for small and mid-sized companies in the United States. The company develops a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry. It offers professional employer services under which it enters into a client services agreement to establish a co-employment relationship with each client company, assuming responsibility for payroll, payroll taxes, workers compensation coverage, and other administration functions for the client’s existing workforce. The company provides staffing and recruiting services, such as on-demand or short-term staffing assignment, contract staffing, direct placement, and long-term or indefinite-term on-site management services. It serves electronics manufacturers, light-manufacturing industries, agriculture-based companies, transportation and shipping enterprises, food processors, telecommunications companies, public utilities, general contractors in various construction-related fields, restaurant franchises, and professional services firms. Barrett Business Services, Inc. was incorporated in 1965 and is headquartered in Vancouver, Washington.