Reviewing Maximus (NYSE:MMS) and Barrett Business Services (NASDAQ:BBSI)

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

Volatility & Risk

Barrett Business Services has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500. Comparatively, Maximus has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Barrett Business Services	2.77%	20.95%	6.11%
Maximus	7.07%	24.91%	10.08%

Dividends

Barrett Business Services pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Maximus pays an annual dividend of $1.32 per share and has a dividend yield of 2.2%. Barrett Business Services pays out 23.5% of its earnings in the form of a dividend. Maximus pays out 19.5% 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. Barrett Business Services has raised its dividend for 1 consecutive years and Maximus has raised its dividend for 2 consecutive years. Maximus is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Barrett Business Services and Maximus, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Barrett Business Services	1	2	2	1	2.50
Maximus	1	1	0	0	1.50

Barrett Business Services presently has a consensus price target of $41.00, suggesting a potential upside of 23.42%. Given Barrett Business Services’ stronger consensus rating and higher probable upside, analysts clearly believe Barrett Business Services is more favorable than Maximus.

Earnings & Valuation

This table compares Barrett Business Services and Maximus”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Barrett Business Services	$1.24 billion	0.65	$54.45 million	$1.36	24.43
Maximus	$5.43 billion	0.57	$319.03 million	$6.77	8.78

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

Insider and Institutional Ownership

86.8% of Barrett Business Services shares are owned by institutional investors. Comparatively, 97.2% of Maximus shares are owned by institutional investors. 4.8% of Barrett Business Services shares are owned by insiders. Comparatively, 1.8% of Maximus shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

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

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.

About Maximus

Maximus, Inc. operates as a provider of government services in the United States and internationally. It operates through three segments: U.S. Federal Services, U.S. Services, and Outside the U.S. The U.S. Services segment offers program eligibility support and enrollment; centralized multilingual customer contact centers, multichannel, and digital self-service options for enrollment; application assistance and independent health plan choice counseling; beneficiary outreach, education, eligibility, enrollment, and redeterminations; and person-centered independent disability, long-term sick, and other health assessments. This segment also provides employment services, such as eligibility support, case management, job-readiness preparation, job search and employer outreach, job retention and career advancement, and educational and training services; technology solutions; system implementation project management services; and specialized consulting services. The U.S. Federal Services segment offers Business process services, eligibility and enrollment, outreach, and other services for federal health and human services programs; clinical services; and technology solutions, including application development and modernization services, enterprise business solutions, advanced analytics and emerging technologies, cybersecurity services, and infrastructure and engineering solutions. The Outside the U.S. segment offers BPS solutions for international governments, including health and disability assessments, program administration for employment services, wellbeing solutions, and other job seeker-related services. Maximus, Inc. was founded in 1975 and is headquartered in McLean, Virginia.