DLH Holdings Corp. (NASDAQ: DLHC) and Engility Holdings (NYSE:EGL) are both small-cap business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitabiliy, valuation, institutional ownership and analyst recommendations.

Valuation & Earnings

This table compares DLH Holdings Corp. and Engility Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DLH Holdings Corp. $108.13 million 0.60 $7.68 million $0.38 15.18
Engility Holdings $2.04 billion 0.53 $192.00 million ($0.03) -970.33

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

Insider & Institutional Ownership

51.0% of DLH Holdings Corp. shares are owned by institutional investors. Comparatively, 91.2% of Engility Holdings shares are owned by institutional investors. 21.6% of DLH Holdings Corp. shares are owned by insiders. Comparatively, 0.4% of Engility Holdings shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for DLH Holdings Corp. and Engility Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DLH Holdings Corp. 0 0 2 0 3.00
Engility Holdings 0 2 4 0 2.67

DLH Holdings Corp. currently has a consensus price target of $6.75, suggesting a potential upside of 16.98%. Engility Holdings has a consensus price target of $35.83, suggesting a potential upside of 23.10%. Given Engility Holdings’ higher possible upside, analysts clearly believe Engility Holdings is more favorable than DLH Holdings Corp..

Profitability

This table compares DLH Holdings Corp. and Engility Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DLH Holdings Corp. 4.13% 14.32% 6.82%
Engility Holdings -0.03% 10.19% 3.27%

Volatility & Risk

DLH Holdings Corp. has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Engility Holdings has a beta of 2.1, suggesting that its share price is 110% more volatile than the S&P 500.

Summary

DLH Holdings Corp. beats Engility Holdings on 8 of the 14 factors compared between the two stocks.

Engility Holdings Company Profile

Engility Holdings, Inc. (Engility) is a provider of systems engineering services, training, program management, and operational support for the United States Government worldwide. The Company’s business is focused on providing a range of engineering, technical, analytical, advisory, training, logistics and support services. The Company operates in two segments: Professional Support Services and Mission Support Services. The Professional Support Services segment provides Systems Engineering and Technical Assistance (SETA) services, program management support and software engineering lifecycle sustainment and support services. Through its Mission Support Services segment, it provides capabilities, such as defense related training, education and support services, law enforcement training, national security infrastructure and institutional development. In January 2014, Engility Holdings Inc completed the acquisition of Dynamics Research Corp.

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