HFF (NYSE: HF) and Marcus & Millichap (NYSE:MMI) are both small-cap financials companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Insider & Institutional Ownership

88.0% of HFF shares are held by institutional investors. Comparatively, 41.0% of Marcus & Millichap shares are held by institutional investors. 5.7% of HFF shares are held by company insiders. Comparatively, 58.3% of Marcus & Millichap shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares HFF and Marcus & Millichap’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HFF 15.20% 39.03% 8.30%
Marcus & Millichap 8.53% 21.37% 15.24%

Valuation & Earnings

This table compares HFF and Marcus & Millichap’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HFF $517.43 million 3.69 $77.19 million $2.26 21.91
Marcus & Millichap $717.45 million 1.68 $64.65 million $1.54 20.48

HFF has higher earnings, but lower revenue than Marcus & Millichap. Marcus & Millichap is trading at a lower price-to-earnings ratio than HFF, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

HFF has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500. Comparatively, Marcus & Millichap has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for HFF and Marcus & Millichap, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HFF 1 2 0 0 1.67
Marcus & Millichap 0 2 1 0 2.33

HFF presently has a consensus target price of $28.00, suggesting a potential downside of 43.46%. Marcus & Millichap has a consensus target price of $31.00, suggesting a potential downside of 1.71%. Given Marcus & Millichap’s stronger consensus rating and higher possible upside, analysts clearly believe Marcus & Millichap is more favorable than HFF.

HFF Company Profile

HFF, Inc. is a holding company. The Company holds the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the Operating Partnerships), held through the subsidiary HFF Partnership Holdings, LLC, and all of the outstanding shares of Holliday GP Corp. (Holliday GP). The Company operates through the commercial real estate financial intermediary segment. It offers debt placement, investment sales, distressed debt and real estate owned advisory services, equity placement, investment banking and advisory services, loan sales and commercial loan servicing. Its fully-integrated national capital markets platform, coupled with its knowledge of the commercial real estate markets provides an range of capital markets services, including Debt placement; Investment sales; Distressed debt and real estate owned advisory services; Equity placement; Investment banking and advisory services; Loan sales; and Commercial loan servicing.

Marcus & Millichap Company Profile

Marcus & Millichap, Inc. is a brokerage company specializing in commercial real estate investment sales, financing, research and advisory services. The Company offers three primary services to its clients: commercial real estate investment brokerage, financing, and ancillary services, including other research, advisory and consulting services. It provides its financing services through Marcus & Millichap Capital Corporation, which is a broker of debt financing for commercial properties. Its research, advisory and consulting services are designed to assist clients in forming their investment strategy and making transaction decisions. Its advisory services include opinions of value, operating and financial performance benchmarking analysis, and specific asset buy-sell strategies. As of December 31, 2016, the Company had over 1,700 investment sales and financing professionals in 82 offices in the United States and Canada that provide investment brokerage and financing services.

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