DLH (NASDAQ:DLHC – Get Free Report) and Star Equity (NASDAQ:STRR – Get Free Report) are both small-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.
Risk & Volatility
DLH has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500. Comparatively, Star Equity has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.
Profitability
This table compares DLH and Star Equity’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| DLH | -8.51% | -10.42% | -4.04% |
| Star Equity | -4.35% | -4.21% | -2.39% |
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| DLH | 1 | 1 | 1 | 0 | 2.00 |
| Star Equity | 1 | 1 | 1 | 1 | 2.50 |
Star Equity has a consensus target price of $28.00, suggesting a potential upside of 171.98%. Given Star Equity’s stronger consensus rating and higher probable upside, analysts clearly believe Star Equity is more favorable than DLH.
Valuation and Earnings
This table compares DLH and Star Equity”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| DLH | $253.54 million | 0.24 | $1.36 million | ($1.48) | -2.85 |
| Star Equity | $209.75 million | 0.18 | -$5.92 million | ($3.06) | -3.36 |
DLH has higher revenue and earnings than Star Equity. Star Equity is trading at a lower price-to-earnings ratio than DLH, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
67.2% of DLH shares are owned by institutional investors. Comparatively, 3.8% of Star Equity shares are owned by institutional investors. 12.8% of DLH shares are owned by company insiders. Comparatively, 31.6% of Star Equity shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
About DLH
DLH Holdings Corp. provides technology-enabled business process outsourcing, program management solutions, and public health research and analytics services in the United States. It offers digital transformation and cyber security solutions, including artificial intelligence and machine learning, cloud enablement, cybersecurity ecosystem, big data analytics, and modeling and simulation to the National Institutes of Health (NIH), the Defense Health Agency, Tele-medicine and Advanced Technology Research Center, and US Navy Naval Information Warfare Center (NIWC). The company also provides science research and development services and solutions, such as data analytics, testing and evaluation, clinical trials research services, and epidemiology studies to support multiple operating divisions, including NIH and the Center for Disease Control and Prevention, as well as the Military Health System. In addition, it offers system engineering and integration solutions in the areas of pharmaceutical delivery logistics, fire protection engineering, biomedical equipment, and technology engineering on behalf of the Department of Veterans Affairs, NIWC, Health and Human Services, and other federal customers. The company also provides business process management services under the trademarks, e-PRAT and SPOT-m, as well as the registered trademark, Infinibyte for cloud-based solutions. The company was formerly known as TeamStaff, Inc. and changed its name to DLH Holdings Corp. in June 2012. DLH Holdings Corp. was incorporated in 1969 and is headquartered in Atlanta, Georgia.
About Star Equity
Star Equity Holdings, Inc. engages in the construction business in the United States and internationally. It operates through two segments: Construction, and Investments. It manufactures modular housing units, structural wall panels, permanent wood foundation systems, and other engineered wood products; supplies general contractors with building materials; holds real estate assets; and manages investments. The company was formerly known as Digirad Corporation and changed its name to Star Equity Holdings, Inc. in December 2020. Star Equity Holdings, Inc. was founded in 1985 and is headquartered in Old Greenwich, Connecticut.
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