ReachLocal (NASDAQ: RLOC) and Tremor Video (NYSE:TRMR) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, valuation, institutional ownership, risk and dividends.

Profitability

This table compares ReachLocal and Tremor Video’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ReachLocal -5.20% N/A -15.27%
Tremor Video -9.64% -20.27% -11.42%

Volatility & Risk

ReachLocal has a beta of -0.18, suggesting that its share price is 118% less volatile than the S&P 500. Comparatively, Tremor Video has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for ReachLocal and Tremor Video, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ReachLocal 0 0 0 0 N/A
Tremor Video 0 1 2 0 2.67

Tremor Video has a consensus target price of $3.13, indicating a potential upside of 30.21%. Given Tremor Video’s higher probable upside, analysts plainly believe Tremor Video is more favorable than ReachLocal.

Institutional & Insider Ownership

36.4% of Tremor Video shares are held by institutional investors. 8.2% of Tremor Video shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares ReachLocal and Tremor Video’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ReachLocal N/A N/A N/A ($1.66) -2.77
Tremor Video $173.60 million 0.69 -$7.73 million ($0.33) -7.27

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

Summary

Tremor Video beats ReachLocal on 8 of the 10 factors compared between the two stocks.

ReachLocal Company Profile

ReachLocal, Inc. (ReachLocal) offers a range of online marketing and reporting solutions. The Company’s digital marketing solution consists of products and solutions in three categories: digital advertising (including ReachSearch, ReachDisplay, ReachDisplay InApp and ReachRetargeting); Web presence (including ReachSite+ReachEdge, ReachSEO, ReachCast, ReachListings and TotalLiveChat), and software (ReachEdge and Kickserv). It focuses on small to medium-sized businesses (SMBs). The Company delivers its suite of products and solutions to local businesses through a combination of its technology platform, its direct inside and outside sales force, and select third-party agencies and resellers. It also focuses on certain core verticals, which include home services, professional services, specialty services and healthcare. It also provides solutions to multi-location advertisers, such as franchises and other businesses that have multiple locations across a number of cities and states.

Tremor Video Company Profile

Tremor Video, Inc. is an advertising technology company. The Company provides software for video advertising effectiveness. The Company operates through online video advertising services segment. Its technology optimizes performance of video advertisement campaigns across all screens, including computers, smartphones, tablets and connected televisions. The Company’s buyer platform enables advertisers, agencies and other buyers of advertising to discover, buy, optimize and measure the effectiveness of their video advertisement campaigns. The Company’s technology analyzes video content, detects viewer and system attributes, and uses its repository of stored third-party data to optimize and target the delivery of advertisement campaigns. Its buyers can transact directly on its buyer platform through the Tremor Video DSP, a user interface that allows them to manage the execution of their campaigns on a programmatic basis. The Company also offers a seller platform, the Tremor Video SSP.

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