Sizmek (NASDAQ: SZMK) and Rocket Fuel (NASDAQ:FUEL) are both cyclical consumer goods & services companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitabiliy, institutional ownership and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Sizmek -2.13% -3.56% -2.52%
Rocket Fuel -15.09% -44.37% -13.65%

Earnings & Valuation

This table compares Sizmek and Rocket Fuel’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sizmek N/A N/A N/A ($4.29) -0.91
Rocket Fuel $446.69 million 0.28 -$10.06 million ($1.49) -1.81

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

Institutional and Insider Ownership

41.6% of Sizmek shares are held by institutional investors. Comparatively, 31.7% of Rocket Fuel shares are held by institutional investors. 15.0% of Sizmek shares are held by insiders. Comparatively, 34.9% of Rocket Fuel 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.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Sizmek and Rocket Fuel, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sizmek 0 0 0 0 N/A
Rocket Fuel 1 3 0 0 1.75

Rocket Fuel has a consensus target price of $3.48, indicating a potential upside of 28.70%. Given Rocket Fuel’s higher possible upside, analysts clearly believe Rocket Fuel is more favorable than Sizmek.

Volatility & Risk

Sizmek has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, Rocket Fuel has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Summary

Sizmek beats Rocket Fuel on 5 of the 9 factors compared between the two stocks.

About Sizmek

Sizmek Inc. (Sizmek) is an open ad management company. The Company operates an independent online advertisement campaign management and distribution platform. The Company helps advertisers, agencies and publishers engage with consumers across multiple online media channels (mobile, display, video and social). It connects approximately 19,000 advertisers and 3,700 agencies to audiences in over 60 countries. Its online campaign management platform, Sizmek MDX, helps advertisers, agencies and publishers in managing their advertising budgets across multiple online media channels and formats, such as desktop, mobile, rich media, social media, in-stream video, interactive video, display and search. The Sizmek MDX platform provides its customers with an end-to-end solution in planning, creative, delivery, measurement and optimization of online media campaigns. Its solutions are delivered through a technology platform that allows delivery of global online media advertising campaigns.

About Rocket Fuel

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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