Resources Connection (NASDAQ:RGP) and Insperity (NYSE:NSP) Critical Comparison

Resources Connection (NASDAQ:RGP) and Insperity (NYSE:NSP) are both small-cap business services companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Profitability

This table compares Resources Connection and Insperity’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Resources Connection	-26.13%	0.62%	0.43%
Insperity	0.25%	12.53%	0.59%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Resources Connection and Insperity, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Resources Connection	2	0	2	0	2.00
Insperity	2	2	1	0	1.80

Resources Connection presently has a consensus target price of $6.00, indicating a potential upside of 32.45%. Insperity has a consensus target price of $48.25, indicating a potential upside of 13.02%. Given Resources Connection’s stronger consensus rating and higher probable upside, equities analysts plainly believe Resources Connection is more favorable than Insperity.

Dividends

Resources Connection pays an annual dividend of $0.28 per share and has a dividend yield of 6.2%. Insperity pays an annual dividend of $2.40 per share and has a dividend yield of 5.6%. Resources Connection pays out -7.0% of its earnings in the form of a dividend. Insperity pays out 521.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Insperity has increased its dividend for 14 consecutive years. Resources Connection is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

93.2% of Resources Connection shares are held by institutional investors. Comparatively, 93.4% of Insperity shares are held by institutional investors. 7.9% of Resources Connection shares are held by company insiders. Comparatively, 5.3% of Insperity shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Resources Connection and Insperity”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Resources Connection	$551.33 million	0.28	-$191.78 million	($4.02)	-1.13
Insperity	$6.58 billion	0.24	$91.00 million	$0.46	92.81

Insperity has higher revenue and earnings than Resources Connection. Resources Connection is trading at a lower price-to-earnings ratio than Insperity, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Resources Connection has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, Insperity has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500.

Summary

Insperity beats Resources Connection on 9 of the 17 factors compared between the two stocks.

About Resources Connection

Resources Connection, Inc. provides consulting services to business customers under the Resources Global Professionals name in North America, Europe, and the Asia Pacific. The company offers services in the areas of transactions, including integration and divestitures, bankruptcy/restructuring, going public readiness and support, financial process optimization, and system implementation; and regulations, such as accounting regulations, internal audit and compliance, data privacy and security, healthcare compliance, and regulatory compliance. It provides transformations services comprising finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics. The company was formerly known as RC Transaction Corp. and changed its name to Resources Connection, Inc. in August 2000. Resources Connection, Inc. was founded in 1996 and is headquartered in Irvine, California.

About Insperity

Insperity, Inc. engages in the provision of human resources (HR) and business solutions to improve business performance for small and medium-sized businesses primarily in the United States. It offers its HR services through its workforce optimization and workforce synchronization solutions that include a range of human resources functions, such as payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management, and training and development services. The company also provides Insperity Premier, a cloud-based human capital management platform that offers professional employer organization HR outsourcing solutions to its clients; people management services; and employer liability management services, as well as solutions for middle market. In addition, it offers MarketPlace, an e-commerce portal that offers a range of products and services; and Workforce Acceleration, a human capital management and payroll services solution; integrated payroll; benefits administration; HR administration and employee onboarding; time and attendance; performance management; reporting and analytics; recruiting; employment screening; retirement; and insurance services. The company was formerly known as Administaff, Inc. and changed its name to Insperity, Inc. in March 2011. Insperity, Inc. was founded in 1986 and is headquartered in Kingwood, Texas.