Critical Comparison: Netcapital (NASDAQ:NCPL) & Fathom (NASDAQ:FTHM)

Netcapital (NASDAQ:NCPL) and Fathom (NASDAQ:FTHM) 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 dividends, analyst recommendations, earnings, risk, institutional ownership, valuation and profitability.

Earnings and Valuation

This table compares Netcapital and Fathom”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Netcapital	$739,504.00	11.36	-$28.30 million	($15.49)	-0.07
Fathom	$420.48 million	0.04	-$20.31 million	($0.73)	-0.78

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

Volatility and Risk

Netcapital has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Fathom has a beta of 2.46, meaning that its stock price is 146% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Netcapital and Fathom, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Netcapital	1	0	0	0	1.00
Fathom	1	0	0	1	2.50

Fathom has a consensus target price of $2.50, indicating a potential upside of 338.60%. Given Fathom’s stronger consensus rating and higher possible upside, analysts clearly believe Fathom is more favorable than Netcapital.

Institutional and Insider Ownership

30.7% of Netcapital shares are owned by institutional investors. Comparatively, 55.5% of Fathom shares are owned by institutional investors. 4.9% of Netcapital shares are owned by insiders. Comparatively, 16.4% of Fathom shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Netcapital and Fathom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Netcapital	-3,806.77%	-40.53%	-32.59%
Fathom	-4.83%	-49.25%	-25.17%

Summary

Fathom beats Netcapital on 11 of the 14 factors compared between the two stocks.

About Netcapital

Netcapital Inc. operates as a fintech company. It offers Netcapital.com, an SEC-registered funding portal that enables private companies to raise capital online, as well as allows investors to invest from anywhere in the world. The company also provides various services, including automated onboarding process and filing of required regulatory documents; compliance review; custom-built offering page on its portal website; third party transfer agent and custodial services; and rolling closes which provides access to liquidity before final close date of offerings, as well as assistance with annual fillings and direct access to team for ongoing support. In addition, it offers advisor services, which includes incubation of technology start-ups; investors introduction; online marketing; website design and software development; message crafting including pitch decks, offering pages, and ad creation; strategic advice; and technology consulting services. Further, the company provides valuation services, such as business valuation, fairness and solvency opinions, ESOP feasibility and valuation, non-cash charitable contribution, economic analysis of damages, intellectual property appraisals, and compensation studies. Netcapital Inc. is based in Boston, Massachusetts.

About Fathom

Fathom Holdings Inc. provides a real estate services platform that integrates residential brokerage, mortgage, title, and insurance services in the United States. It operates through three segments: Real Estate Brokerage, Mortgage, and Technology. The Real Estate Brokerage segment provides real estate brokerage services. The Mortgage segment offers residential loan origination and underwriting services. The Technology segment provides Software as a Service solutions and data mining for third party customers. It offers access to various properties for sale or lease through its FathomRealty.com website to buyers, sellers, landlords, and tenants; insurance agency services; and title services. In addition, the company provides intelliAgent, a real estate technology platform that offers a suite of brokerage and agent level tools, technology, business processes, business intelligence and reporting, and training; transaction, personnel, customer relationship, and accounting management for agent transactions; and reporting, social media marketing, and other marketing and marketing repository services, as well as marketplace for add-on services and third-party technology. Its brands include Fathom Realty, Dagley Insurance, Encompass Lending, intelliAgent, LiveBy, Real Results, Verus Title, and Cornerstone. The company was founded in 2010 and is headquartered in Cary, North Carolina.