Analyzing Kforce (KFRC) & RPX (RPXC)

Kforce (NASDAQ: KFRC) and RPX (NASDAQ:RPXC) are both small-cap business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Profitability

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This table compares Kforce and RPX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kforce 2.45% 29.84% 10.21%
RPX -23.95% 6.17% 4.24%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Kforce and RPX, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kforce 0 2 2 0 2.50
RPX 1 1 1 0 2.00

Kforce currently has a consensus target price of $26.25, indicating a potential upside of 0.19%. RPX has a consensus target price of $14.33, indicating a potential upside of 35.73%. Given RPX’s higher probable upside, analysts clearly believe RPX is more favorable than Kforce.

Dividends

Kforce pays an annual dividend of $0.48 per share and has a dividend yield of 1.8%. RPX pays an annual dividend of $0.10 per share and has a dividend yield of 0.9%. Kforce pays out 36.6% of its earnings in the form of a dividend. RPX pays out -6.3% 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.

Insider and Institutional Ownership

79.7% of Kforce shares are held by institutional investors. Comparatively, 89.7% of RPX shares are held by institutional investors. 13.3% of Kforce shares are held by company insiders. Comparatively, 3.5% of RPX shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Kforce and RPX’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kforce $1.36 billion 0.51 $33.28 million $1.31 20.00
RPX $330.46 million 1.59 -$79.14 million ($1.60) -6.60

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

Volatility and Risk

Kforce has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, RPX has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500.

Summary

Kforce beats RPX on 12 of the 16 factors compared between the two stocks.

Kforce Company Profile

Kforce Inc. (Kforce) is engaged in providing professional and technical specialty staffing services and solutions. The Company operates through three segments, which include Technology (Tech), Finance and Accounting (FA) and Government Solutions (GS). The Company’s Tech segment includes the operations of its subsidiary Kforce Global Solutions, Inc. The FA segment is engaged in providing both temporary staffing and permanent placement services to its clients in areas, such as general accounting, business analysis and others. The GS segment is engaged in providing services and solutions to the Federal Government as both a prime contractor and a subcontractor in the fields of information technology, and finance and accounting. Kforce operates through field offices located throughout the United States and one office in Manila, the Philippines. The Company offers various staffing services that consist of temporary staffing services (Flex) and permanent placement services (Direct Hire).

RPX Company Profile

RPX Corporation is engaged in providing an alternative to litigation through its patent risk management services. The Company helps companies reduce patent litigation risk and corporate legal expense through two primary service offerings: patent risk management services and discovery services. It operates through two segments: patent risk management and discovery services. Its patent risk management segment generates its revenues from membership subscriptions, premiums earned from insurance policies, and management fees for marketing, underwriting, and claim management. Its discovery services segment generates its revenues from fees generated for data collection, hosting and processing, project management, and document review services. The Company serves clients in a range of industries, including consumer electronics, personal computers, e-commerce, financial services, software, media content and distribution, mobile communications and handsets, networking and semiconductors.

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