Reviewing Direct Digital (NASDAQ:DRCT) and Star Fashion Culture (NASDAQ:STFS)

Star Fashion Culture (NASDAQ:STFS) and Direct Digital (NASDAQ:DRCT) are both small-cap business services companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Insider and Institutional Ownership

4.0% of Direct Digital shares are held by institutional investors. 25.6% of Direct Digital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Star Fashion Culture and Direct Digital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Star Fashion Culture	$120.79 million	0.01	-$18.26 million	N/A	N/A
Direct Digital	$62.29 million	0.03	-$6.24 million	($1.36)	-0.05

Direct Digital has lower revenue, but higher earnings than Star Fashion Culture.

Profitability

This table compares Star Fashion Culture and Direct Digital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Star Fashion Culture	N/A	N/A	N/A
Direct Digital	-26.76%	N/A	-39.57%

Risk & Volatility

Star Fashion Culture has a beta of -0.11, meaning that its share price is 111% less volatile than the S&P 500. Comparatively, Direct Digital has a beta of 6.01, meaning that its share price is 501% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Star Fashion Culture and Direct Digital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Star Fashion Culture	1	0	0	0	1.00
Direct Digital	1	1	1	0	2.00

Direct Digital has a consensus price target of $6.00, indicating a potential upside of 9,216.77%. Given Direct Digital’s stronger consensus rating and higher probable upside, analysts clearly believe Direct Digital is more favorable than Star Fashion Culture.

Summary

Direct Digital beats Star Fashion Culture on 8 of the 11 factors compared between the two stocks.

About Star Fashion Culture

Star Fashion Culture Holdings Limited provides content marketing solutions services in the People’s Republic of China. It offers marketing campaign planning and execution services; offline advertising services; and online precision marketing services. The company was founded in 2015 and is based in Xiamen, the People’s Republic of China. Star Fashion Culture Holdings Limited operates as a subsidiary of Xingji ZhangPingting Limited.

About Direct Digital

Direct Digital Holdings, Inc. operates as an end-to-end full-service programmatic advertising platform. The company's platform primarily focuses on providing advertising technology, data-driven campaign optimization, and other solutions to underserved and less efficient markets on both the buy- and sell-side of the digital advertising ecosystem. It serves various industry verticals, such as travel, healthcare, education, financial services, consumer products, and other sectors with a focus on small and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.