Contrasting Kelly Services (NASDAQ:KELYB) & LegalZoom.com (NASDAQ:LZ)

Kelly Services (NASDAQ:KELYB) and LegalZoom.com (NASDAQ:LZ) are both small-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Volatility & Risk

Kelly Services has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, LegalZoom.com has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Earnings & Valuation

This table compares Kelly Services and LegalZoom.com”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kelly Services	$4.25 billion	0.18	-$254.10 million	($7.81)	-2.87
LegalZoom.com	$756.04 million	1.27	$15.43 million	$0.09	62.33

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

Analyst Ratings

This is a summary of current recommendations for Kelly Services and LegalZoom.com, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kelly Services	1	0	0	0	1.00
LegalZoom.com	3	5	0	0	1.62

LegalZoom.com has a consensus target price of $7.30, suggesting a potential upside of 30.12%. Given LegalZoom.com’s stronger consensus rating and higher possible upside, analysts plainly believe LegalZoom.com is more favorable than Kelly Services.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kelly Services	-6.73%	2.69%	1.19%
LegalZoom.com	2.13%	15.83%	5.08%

Institutional & Insider Ownership

0.2% of Kelly Services shares are owned by institutional investors. Comparatively, 82.0% of LegalZoom.com shares are owned by institutional investors. 93.1% of Kelly Services shares are owned by company insiders. Comparatively, 7.4% of LegalZoom.com shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

LegalZoom.com beats Kelly Services on 11 of the 13 factors compared between the two stocks.

About Kelly Services

Kelly Services, Inc. engages in staffing and workforce solutions. It operates through the following segments: Americas Staffing, Global Talent Solutions, and International Staffing. The Americas Staffing segment delivers temporary staffing, as well as direct-hire placement services, in a number of specialty staffing services, including office, education, marketing, electronic assembly, light industrial, science, engineering, and information technology in United States, Puerto Rico, Canada, Mexico and Brazil. The Global Talent Solutions segment offers outsourcing, consulting, and centrally delivered staffing business. The International Staffing segment relates to branch-delivered staffing business in the Europe, Middle East, and Africa region, as well as in the Asia Pacific. The company was founded by William Russell Kelly on October 7, 1946 and is headquartered in Troy, MI.

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.