ITEX (OTCMKTS:ITEX) and B. Riley Financial (NASDAQ:RILY) 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 risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Institutional & Insider Ownership

48.8% of B. Riley Financial shares are held by institutional investors. 32.0% of ITEX shares are held by insiders. Comparatively, 24.6% of B. Riley Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

ITEX pays an annual dividend of $0.20 per share and has a dividend yield of 5.6%. B. Riley Financial pays an annual dividend of $1.00 per share and has a dividend yield of 5.8%. B. Riley Financial has raised its dividend for 1 consecutive years. B. Riley Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

ITEX has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500. Comparatively, B. Riley Financial has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Valuation and Earnings

This table compares ITEX and B. Riley Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ITEX N/A N/A N/A N/A N/A
B. Riley Financial $652.11 million 0.68 $81.61 million N/A N/A

B. Riley Financial has higher revenue and earnings than ITEX.

Profitability

This table compares ITEX and B. Riley Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ITEX N/A N/A N/A
B. Riley Financial 12.52% 31.40% 4.64%

Analyst Ratings

This is a summary of recent recommendations for ITEX and B. Riley Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ITEX 0 0 0 0 N/A
B. Riley Financial 0 0 0 0 N/A

Summary

B. Riley Financial beats ITEX on 8 of the 9 factors compared between the two stocks.

ITEX Company Profile

ITEX Corporation operates a marketplace in which products and services are exchanged by marketplace members without exchanging cash in the United States. The company's marketplace provides a forum for members to purchase from and sell their products and services to other members using ITEX dollars instead of United States dollars. It also administers the marketplace, as well as provides record-keeping and payment transaction processing services. In addition, the company services its member businesses through its independent licensed brokers and franchise network. ITEX Corporation was founded in 1982 and is headquartered in Bellevue, Washington.

B. Riley Financial Company Profile

B. Riley Financial, Inc., through its subsidiaries, provides collaborative financial services and solutions in North America, Australia, and Europe. The company operates in four segments: Capital Markets, Auction and Liquidation, Valuation and Appraisal, and Principal Investments – United Online and magicJack. It offers investment banking services, including merger and acquisitions, restructuring advisory, initial and secondary public offerings, and institutional private placements; and corporate finance, research, securities lending, wealth management, and sales and trading services to corporate, institutional, and high net worth clients. The company also provides retail store liquidation, and wholesale and industrial assets disposition services; valuation and appraisal services to financial institutions, lenders, private equity firms, and other providers of capital; and consumer subscription services consisting of Internet access services and devices under the NetZero and Juno brands, as well as voice over IP cloud-based technology and communication services. In addition, it offers advisory services to private funds, and institutional and high net worth investors; multi-family office practice and wealth management services to ultra-high net worth individuals and families; and senior secured and second lien secured loans to middle market public and the private U.S. companies. The company was formerly known as Great American Group, Inc. and changed its name to B. Riley Financial, Inc. in November 2014. B. Riley Financial, Inc. was founded in 1973 and is headquartered in Woodland Hills, California.

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