Analyzing HireQuest (NASDAQ:HQI) and Resources Connection (NASDAQ:RGP)

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

Dividends

Resources Connection pays an annual dividend of $0.28 per share and has a dividend yield of 5.4%. HireQuest pays an annual dividend of $0.24 per share and has a dividend yield of 2.4%. Resources Connection pays out -4.9% of its earnings in the form of a dividend. HireQuest pays out 48.0% 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. Resources Connection is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Resources Connection has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, HireQuest has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Valuation & Earnings

This table compares Resources Connection and HireQuest”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Resources Connection	$534.63 million	0.33	-$191.78 million	($5.72)	-0.91
HireQuest	$31.69 million	4.49	$3.67 million	$0.50	20.19

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Resources Connection and HireQuest, as provided by MarketBeat.

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

Resources Connection currently has a consensus price target of $6.00, suggesting a potential upside of 15.05%. HireQuest has a consensus price target of $14.00, suggesting a potential upside of 38.68%. Given HireQuest’s higher probable upside, analysts plainly believe HireQuest is more favorable than Resources Connection.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Resources Connection	-35.25%	2.11%	1.54%
HireQuest	21.92%	14.48%	10.15%

Insider & Institutional Ownership

93.2% of Resources Connection shares are held by institutional investors. Comparatively, 12.0% of HireQuest shares are held by institutional investors. 7.9% of Resources Connection shares are held by company insiders. Comparatively, 43.5% of HireQuest shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

HireQuest beats Resources Connection on 10 of the 15 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 HireQuest

HireQuest, Inc. provides temporary staffing services in the United States. It offers staffing services, including direct-dispatch, executive search, consultant, unskilled and semi-skilled industrial and construction personnel, clerical and administrative personnel, and permanent placement services, as well as commercial and non-CDL drivers, and skilled personnel in the medical and dental industries. The company provides its services under the HireQuest Direct, HireQuest, SNelling, DriverQuest, HireQuest Health, Northbound Executive Search, and MRI trade names. It serves construction, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, and retail industries, as well as dental practices. HireQuest, Inc. was founded in 2002 and is headquartered in Goose Creek, South Carolina.