Marchex (NASDAQ: MCHX) and Rocket Fuel (NASDAQ:FUEL) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitabiliy, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Marchex and Rocket Fuel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marchex -71.14% -13.17% -11.58%
Rocket Fuel -15.09% -44.37% -13.65%

Valuation and Earnings

This table compares Marchex and Rocket Fuel’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Marchex $117.94 million 1.01 -$16.06 million ($2.01) -1.40
Rocket Fuel $446.69 million 0.28 -$10.06 million ($1.49) -1.82

Rocket Fuel has higher revenue and earnings than Marchex. Rocket Fuel is trading at a lower price-to-earnings ratio than Marchex, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Marchex has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Rocket Fuel has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Institutional and Insider Ownership

52.0% of Marchex shares are owned by institutional investors. Comparatively, 31.8% of Rocket Fuel shares are owned by institutional investors. 31.3% of Marchex shares are owned by insiders. Comparatively, 34.9% of Rocket Fuel shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Marchex and Rocket Fuel, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marchex 0 1 0 0 2.00
Rocket Fuel 1 4 0 0 1.80

Marchex presently has a consensus price target of $3.00, suggesting a potential upside of 6.38%. Rocket Fuel has a consensus price target of $3.65, suggesting a potential upside of 34.69%. Given Rocket Fuel’s higher probable upside, analysts plainly believe Rocket Fuel is more favorable than Marchex.

Marchex Company Profile

Marchex, Inc. is a mobile advertising analytics company. The Company offers products and services for enterprises that depend on consumer phone calls to drive sales. Its media analytics products can provide actionable intelligence on media channels advertisers use to acquire customers over the phone. Its Marchex Omnichannel Analytics Cloud helps marketers connect customer conversions driven from paid media channels, including search, display and video, social and sites, to phone calls made to a business. Its product offerings include Marchex Call Analytics, Marchex Search Analytics, Marchex Display and Video Analytics, Marchex Social Analytics, Marchex Call Marketplace and Local Leads. Its Local Leads platform is a white-labeled, full service advertising solution for small business resellers, such as Yellow Pages providers and vertical marketing service providers, to sell call advertising, search marketing and other lead generation products.

Rocket Fuel Company Profile

Rocket Fuel Inc. is a technology company, which offers a Programmatic Marketing Platform that is designed for helping marketers and their agencies to connect with consumers through digital media. The Company’s service offerings are organized around platforms, including Data Management Platform (DMP) and Demand Side Platform (DSP), which are used by customers themselves or integrating with other customer relationship management or marketing platforms, and together in various permutations as its Programmatic Marketing Platform. The integrated platform is designed to deliver and optimize media spend to engage, upsell and retarget consumers across addressable channels, including display, mobile and video, and across addressable devices, such as tablets, set top boxes, television and mobile phones. It offers Programmatic Marketing Platform as a managed service, which it operate on behalf of its customers, and as a self-service platform operated by its customers or their agencies directly.

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