Exponent (NASDAQ: EXPO) and Vectrus (NYSE:VEC) are both small-cap business services companies, but which is the better business? We will compare the two companies based on the strength of their profitabiliy, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.

Insider and Institutional Ownership

90.6% of Exponent shares are owned by institutional investors. Comparatively, 83.5% of Vectrus shares are owned by institutional investors. 2.8% of Exponent shares are owned by company insiders. Comparatively, 3.9% of Vectrus shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Exponent and Vectrus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exponent 15.94% 16.52% 11.53%
Vectrus 2.03% 20.74% 5.17%

Dividends

Exponent pays an annual dividend of $0.84 per share and has a dividend yield of 1.3%. Vectrus does not pay a dividend. Exponent pays out 43.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations for Exponent and Vectrus, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exponent 0 0 1 0 3.00
Vectrus 0 1 1 0 2.50

Exponent currently has a consensus price target of $75.00, suggesting a potential upside of 11.69%. Vectrus has a consensus price target of $22.00, suggesting a potential downside of 33.93%. Given Exponent’s stronger consensus rating and higher probable upside, research analysts clearly believe Exponent is more favorable than Vectrus.

Earnings and Valuation

This table compares Exponent and Vectrus’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Exponent $311.50 million 5.69 $71.83 million $1.93 34.79
Vectrus $1.17 billion 0.31 $47.11 million $1.96 16.99

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

Volatility & Risk

Exponent has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, Vectrus has a beta of 2.17, indicating that its stock price is 117% more volatile than the S&P 500.

Summary

Exponent beats Vectrus on 9 of the 15 factors compared between the two stocks.

About Exponent

Exponent, Inc. (Exponent), along with its subsidiaries, is a science and engineering consulting company. Exponent provides engineering and scientific consulting services to clients around the world. Its service offerings are provided on a project-by-project basis. It operates in two segments: Engineering and Other Scientific, and Environmental and Health. Its Engineering and Other Scientific segment includes biomechanics, biomedical engineering, buildings and structures, civil engineering, construction consulting, materials and corrosion engineering, mechanical engineering, polymer science and materials chemistry, statistical and data sciences, thermal sciences and vehicle analysis services. Its Environmental and Health segment includes chemical regulation and food safety; ecological and biological sciences; environmental and earth sciences, and health sciences. Exponent serves clients in automotive, government, health, insurance, manufacturing and technology, among others.

About Vectrus

Vectrus, Inc. is a provider of services to the United States Government across the world. The Company offers services, including infrastructure asset management, logistics and supply chain management, and information technology and network communication. Its infrastructure asset management services support the United States Army, Air Force and Navy, and include infrastructure services, security, warehouse management and distribution, ammunition management, civil engineering, air base maintenance and operations, communications, emergency services, transportation, and life support activities at various global military installations. Its logistics and supply chain management services support and maintain the vehicle and equipment stocks of the United States Army and Marine Corps. Its information technology and network communication services consist of sustainment of communications systems, network security, systems installation and life cycle management of information technology systems.

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