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

Profitability

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

Net Margins Return on Equity Return on Assets
Rocket Fuel -20.05% -120.35% -28.17%
ReachLocal -5.20% N/A -15.27%

Insider & Institutional Ownership

40.4% of Rocket Fuel shares are held by institutional investors. 34.9% of Rocket Fuel shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rocket Fuel N/A N/A N/A ($1.50) -1.73
ReachLocal N/A N/A N/A ($1.65) -2.79

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Rocket Fuel and ReachLocal, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rocket Fuel 0 2 1 0 2.33
ReachLocal 0 0 0 0 N/A

Rocket Fuel presently has a consensus price target of $4.38, indicating a potential upside of 68.27%. Given Rocket Fuel’s higher probable upside, research analysts clearly believe Rocket Fuel is more favorable than ReachLocal.

Summary

Rocket Fuel beats ReachLocal on 5 of the 8 factors compared between the two stocks.

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.

About ReachLocal

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.

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