Critical Analysis: The Hackett Group (HCKT) vs. Its Competitors

The Hackett Group (NASDAQ:HCKT) is one of 271 public companies in the “IT Services” industry, but how does it weigh in compared to its peers? We will compare The Hackett Group to related companies based on the strength of its risk, institutional ownership, analyst recommendations, dividends, earnings, profitability and valuation.

Volatility and Risk

The Hackett Group has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, The Hackett Group’s peers have a beta of 2.15, suggesting that their average share price is 115% more volatile than the S&P 500.

Dividends

The Hackett Group pays an annual dividend of $0.48 per share and has a dividend yield of 3.6%. The Hackett Group pays out 68.6% of its earnings in the form of a dividend. As a group, “IT Services” companies pay a dividend yield of 2.4% and pay out 71.0% of their earnings in the form of a dividend. The Hackett Group has raised its dividend for 1 consecutive years. The Hackett Group is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Profitability

This table compares The Hackett Group and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The Hackett Group	5.86%	34.77%	12.89%
The Hackett Group Competitors	-191.23%	-32.13%	-8.65%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for The Hackett Group and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Hackett Group	1	1	1	0	2.00
The Hackett Group Competitors	1991	5652	9469	342	2.47

The Hackett Group presently has a consensus target price of $16.50, suggesting a potential upside of 22.95%. As a group, “IT Services” companies have a potential upside of 30.32%. Given The Hackett Group’s peers stronger consensus rating and higher probable upside, analysts clearly believe The Hackett Group has less favorable growth aspects than its peers.

Valuation & Earnings

This table compares The Hackett Group and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
The Hackett Group	$305.63 million	$12.94 million	19.17
The Hackett Group Competitors	$3.24 billion	$227.67 million	-23.82

The Hackett Group’s peers have higher revenue and earnings than The Hackett Group. The Hackett Group is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Insider & Institutional Ownership

78.1% of The Hackett Group shares are held by institutional investors. Comparatively, 36.7% of shares of all “IT Services” companies are held by institutional investors. 11.8% of The Hackett Group shares are held by company insiders. Comparatively, 20.4% of shares of all “IT Services” companies are held by company 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

The Hackett Group peers beat The Hackett Group on 8 of the 15 factors compared.

About The Hackett Group

The Hackett Group, Inc. operates as an intellectual property-based executive advisory, strategic consulting, and digital transformation company in the United States, Europe, and internationally. The company operates through three segments: Global Strategy & Business Transformation, Oracle Solutions, and SAP Solutions. It offers Hackett Connect, an online searchable repository; best practice accelerators that provide web-based access to best practices, customized software configuration tools, and best practice process flows; advisor inquiry for access to fact-based advice on proven approaches and methods; best practice research that provides insights into the proven approaches; and peer interaction comprising member-led webcasts, annual best practice conferences, annual member forums, membership performance surveys, and client-submitted content, as well as IP-as-a-service and Hackett Institute programs. The company also provides benchmarking services that conduct studies for selling, general and administrative, finance, human resources, information technology, procurement, enterprise performance management, and shared services; and business transformation practices which help clients develop a coordinated digital transformation strategy. In addition, it offers oracle solutions that help clients to choose and deploy oracle applications that best meet their needs and objectives. Further, the company provides SAP solutions, including planning, architecture, and vendor evaluation and selection through implementation, customization, testing, and integration; post-implementation support, change and exception management, process transparency, system documentation, and end-user training; and off-shore application development, and application maintenance and support services. The company was formerly known as Answerthink, Inc. and changed its name to The Hackett Group, Inc. in 2008. The Hackett Group, Inc. was founded in 1991 and is headquartered in Miami, Florida.