MDC Partners (NASDAQ: MDCA) and Social Reality (NASDAQ:SRAX) are both small-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Profitability

This table compares MDC Partners and Social Reality’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MDC Partners -1.70% -5.72% 1.77%
Social Reality -20.04% -93.45% -29.69%

Institutional & Insider Ownership

83.7% of MDC Partners shares are owned by institutional investors. Comparatively, 0.8% of Social Reality shares are owned by institutional investors. 3.4% of MDC Partners shares are owned by insiders. Comparatively, 22.3% of Social Reality shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

MDC Partners has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500. Comparatively, Social Reality has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for MDC Partners and Social Reality, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MDC Partners 0 4 3 0 2.43
Social Reality 0 0 1 0 3.00

MDC Partners presently has a consensus target price of $12.17, suggesting a potential upside of 28.75%. Social Reality has a consensus target price of $5.00, suggesting a potential upside of 289.50%. Given Social Reality’s stronger consensus rating and higher probable upside, analysts plainly believe Social Reality is more favorable than MDC Partners.

Valuation and Earnings

This table compares MDC Partners and Social Reality’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MDC Partners $1.47 billion 0.38 $150.77 million ($0.56) -16.88
Social Reality $32.35 million 0.32 -$4.16 million ($0.95) -1.35

MDC Partners has higher revenue and earnings than Social Reality. MDC Partners is trading at a lower price-to-earnings ratio than Social Reality, indicating that it is currently the more affordable of the two stocks.

Summary

MDC Partners beats Social Reality on 10 of the 13 factors compared between the two stocks.

MDC Partners Company Profile

MDC Partners Inc. is a provider of global marketing, advertising, activation, communications and strategic consulting solutions. The Company and its subsidiary agencies (Partner Firms) deliver a range of customized services. The Company’s segments include Reportable Segment, All Other and Corporate. The Reportable segment consists of the Company’s integrated advertising, media and public relations service companies. The All Other segment consists of the companies that provide the Company’s specialist marketing offerings, such as direct marketing, sales promotion, market research, strategic communications, database and customer relationship management, data analytics and insights, corporate identity, and design and branding. The Reportable segment includes the operations of various companies, such as Allison & Partners, Anomaly, Crispin Porter + Bogusky, Doner, Forsman & Bodenfors, Hunter PR, kbs, MDC Media Partners and 72andSunny.

Social Reality Company Profile

Social Reality, Inc. is an Internet advertising and platform technology company. The Company provides tools to automate the digital advertising market. It is engaged in the sales of digital media advertising campaigns to advertising agencies and brands; sales of media inventory through real-time bidding (RTB) exchanges; sale and licensing of its SRAX Social platform and related media, and creation of custom platforms for buying media on SRAX for various brands. Its technology assists publishers in delivering their media inventory to the RTB exchanges. It provides the SRAX platform to brands and their advertising agencies. SRAX Social is a social media and loyalty platform that allows brands to launch and manage their social media initiatives. SRAX MD is an advertisement targeting and data platform for healthcare brands and medical content publishers. SRAX APP is a platform that allows publishers and content owners to launch native mobile applications through its SRAX platform.

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