Contrasting MarketWise (NASDAQ:MKTW) & Donnelley Financial Solutions (NYSE:DFIN)

MarketWise (NASDAQ:MKTW) and Donnelley Financial Solutions (NYSE:DFIN) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares MarketWise and Donnelley Financial Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MarketWise	0.70%	-0.96%	1.10%
Donnelley Financial Solutions	4.53%	25.82%	12.29%

Institutional & Insider Ownership

23.0% of MarketWise shares are held by institutional investors. Comparatively, 93.8% of Donnelley Financial Solutions shares are held by institutional investors. 30.0% of MarketWise shares are held by company insiders. Comparatively, 5.2% of Donnelley Financial Solutions 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.

Risk & Volatility

MarketWise has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for MarketWise and Donnelley Financial Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MarketWise	0	1	1	0	2.50
Donnelley Financial Solutions	0	2	2	1	2.80

Donnelley Financial Solutions has a consensus target price of $61.00, indicating a potential upside of 24.39%. Given Donnelley Financial Solutions’ stronger consensus rating and higher possible upside, analysts clearly believe Donnelley Financial Solutions is more favorable than MarketWise.

Earnings and Valuation

This table compares MarketWise and Donnelley Financial Solutions”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MarketWise	$317.50 million	0.95	$5.62 million	$0.88	21.76
Donnelley Financial Solutions	$767.00 million	1.57	$32.40 million	$1.45	33.82

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

Summary

Donnelley Financial Solutions beats MarketWise on 14 of the 15 factors compared between the two stocks.

About MarketWise

MarketWise, Inc. operates a content and technology multi-brand platform for self-directed investors in the United States and Internationally. Its platform includes subscription businesses that provides financial research, software, education, and tools to navigate the financial markets. The company offers various investment strategies, such as value investing, income, growth, commodities, cryptocurrencies, venture, crowdfunded investing, biotechnology, mutual funds, options, and trading; investment research product portfolio through a range of media, including desktops, laptops, tablets, and mobile; and financial newsletters. It provides a suite of stock research tools and portfolio management services under the Chaikin Analytics brand; portfolio management software tools under the TradeSmith brand name; and database of accounting-based financial summaries under the Altimetry brand. In addition, the company develops screeners, monitors, portfolio management tools, and proprietary indicators that produce a composite score to rank publicly traded companies. The company was founded in 1999 and is headquartered in Baltimore, Maryland.

About Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. provides innovative software and technology-enabled financial regulatory and compliance solutions in the United States, Asia, Europe, Canada, and internationally. It operates through four segments: Capital Markets Software Solutions (CM-SS); Capital Markets Compliance and Communications Management (CM-CCM); Investment Companies Software Solutions (IC-SS); and Investment Companies Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue and ActiveDisclosure solutions to public and private companies to manage public and private transactional and compliance processes; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro, and ArcRegulatory, as well as services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators and investors. The IC-CCM segment offers tech-enabled solutions for creating, filing and distributing regulatory communications, and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant for Investment Company Act through the SEC’s EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.