TechTarget (NASDAQ:TTGT) and Stagwell (NASDAQ:STGW) Financial Analysis

Stagwell (NASDAQ:STGW) and TechTarget (NASDAQ:TTGT) are both small-cap business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Profitability

This table compares Stagwell and TechTarget’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stagwell	0.68%	15.31%	2.88%
TechTarget	-232.59%	-16.76%	-11.15%

Institutional and Insider Ownership

35.6% of Stagwell shares are owned by institutional investors. Comparatively, 93.5% of TechTarget shares are owned by institutional investors. 5.6% of Stagwell shares are owned by company insiders. Comparatively, 0.9% of TechTarget shares are owned 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.

Risk and Volatility

Stagwell has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, TechTarget has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Earnings and Valuation

This table compares Stagwell and TechTarget”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stagwell	$2.84 billion	0.43	$2.26 million	$0.06	80.67
TechTarget	$284.90 million	1.37	-$116.86 million	($1.73)	-3.13

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Stagwell and TechTarget, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stagwell	1	2	3	2	2.75
TechTarget	2	1	3	0	2.17

Stagwell currently has a consensus price target of $8.15, suggesting a potential upside of 68.39%. TechTarget has a consensus price target of $11.25, suggesting a potential upside of 107.95%. Given TechTarget’s higher probable upside, analysts plainly believe TechTarget is more favorable than Stagwell.

Summary

Stagwell beats TechTarget on 11 of the 14 factors compared between the two stocks.

About Stagwell

Stagwell Inc. provides digital transformation, performance media and data, consumer insights and strategy, and creativity and communications services. The company operates through three segments: Integrated Agencies Network, Brand Performance Network, and Communications Network. It designs and builds digital platforms and experiences that support the delivery of content, commerce, service, and sales; creates websites, mobile applications, back-end systems, content and data management systems, and other digital environments; designs and implements technology and data strategies; and develops software and related technology products, including artificial intelligence (AI)-enabled communications, research, and media technology, cookie-less data platforms for advance targeting and activation, software tools for e-commerce applications, specialty media solutions in the augmented reality space, and text messaging applications for consumer engagement. The company also provides audience analysis, and media buying and planning services; and strategic insights and guidance services that offers business content, product, communications, and media strategies. In addition, it offers strategy development, advertising creation, live events, immersive digital experiences, cross platform engagement, and social media content services; and leadership, investor and financial relations, social media, executive positioning and visibility, strategic communication, public relation, and public affair services. Further, the company provides Stagwell Marketing Cloud, a suite of software-as-a-service (SaaS) and data-as-a-service (DaaS) technology solutions, including research and insights, communications technology, advance media platform, and media studios; and technology-driven solutions for in-house marketers. Stagwell Inc. is headquartered in New York, New York.

About TechTarget

TechTarget, Inc., together with its subsidiaries, provides marketing and sales services that deliver business impact for business-to-business technology companies in North America and internationally. The company's service enables technology vendors to identify, reach, and influence corporate information technology (IT) decision-makers actively researching specific IT purchases; and customized marketing programs that integrate demand generation, brand advertising techniques, and content curation and creation. It offers business to business services, such as IT Deal Alert, a suite of data, software, and services comprising Priority Engine and Qualified Sales Opportunities to identify and prioritize accounts and individuals actively researching new technology purchases or upgrades; demand solutions provides marketing programs, including white papers, webcasts, podcasts, videocasts, virtual trade shows, and content sponsorships; brand solutions which includes on-network banner advertising and digital sponsorships, off-network banner targeting, and microsites and related formats; custom content creation that delivers market insights and guidance to technology companies and off-the-shelf editorial sponsorship products on topics aligned to customer markets; and BrightTALK platform which allows customers to create, host and promote webinars, virtual events, and video content. In addition, the company operates websites, webinars, and virtual event channels that focus on a specific IT sector, such as storage, security, or networking; and enables registered members to conduct their pre-purchase research by accessing vendor supplied content through its virtual event and webinar channels, and website networks. TechTarget, Inc. was incorporated in 1999 and is headquartered in Newton, Massachusetts.