Connecture (NASDAQ: CNXR) and Leaf Group (NYSE:DMD) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for Connecture and Leaf Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Connecture 0 0 0 0 N/A
Leaf Group 0 1 1 0 2.50

Leaf Group has a consensus target price of $7.75, suggesting a potential upside of 22.05%. Given Leaf Group’s higher possible upside, analysts clearly believe Leaf Group is more favorable than Connecture.

Earnings and Valuation

This table compares Connecture and Leaf Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Connecture $82.18 million 0.18 -$8.20 million ($1.02) -0.65
Leaf Group N/A N/A N/A ($0.24) -26.46

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

Risk and Volatility

Connecture has a beta of 2.16, meaning that its stock price is 116% more volatile than the S&P 500. Comparatively, Leaf Group has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Profitability

This table compares Connecture and Leaf Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Connecture -21.91% N/A -20.45%
Leaf Group -31.38% -52.73% -41.29%

Institutional and Insider Ownership

38.8% of Connecture shares are held by institutional investors. Comparatively, 58.8% of Leaf Group shares are held by institutional investors. 58.1% of Connecture shares are held by company insiders. Comparatively, 44.0% of Leaf Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Connecture beats Leaf Group on 6 of the 10 factors compared between the two stocks.

About Connecture

Connecture, Inc. provides a Web-based consumer shopping, enrollment and retention platform for health insurance distribution. The Company caters its services to health insurance marketplace operators, such as health plans, brokers and exchange operators. It operates through four segments: Enterprise/Commercial, Enterprise/State, Medicare and Private Exchange. The Enterprise/Commercial segment offers insurance distribution solutions to health plans. The Enterprise/State segment offers the sales automation solutions to state Governments, which allow its customers to offer customized individual and small group exchanges. The Medicare segment offers Web-based Medicare plan comparison, prescription drug comparison and enrollment tools for health plans, pharmacy benefit managers, pharmacies, field marketing organizations and call centers. The Private Exchange segment offers defined-contribution benefit exchange solutions to benefit consultants, brokers, exchange operators and aggregators.

About Leaf Group

Leaf Group Ltd., formerly Demand Media, Inc., is diversified Internet marketplaces and media company. The Company has online media properties and marketplace platforms that enable communities of creators to reach audiences in lifestyle categories. The Company operates an online studio platform for the professional creation and distribution of content, as well as two online artist marketplaces. Its business comprises two service offerings: Content & Media and Marketplaces. The Company creates media content, including text articles, videos, photographs and designed visual formats, and publishes such content to its owned and operated online properties and to its customers’ online properties. The Company also offers its content creation and distribution platform to provide custom content and other content marketing solutions to brands, publishers and advertisers.

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