Rocket Fuel (NASDAQ: FUEL) and MDC Partners (NASDAQ:MDCA) are both small-cap cyclical consumer goods & services companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Institutional & Insider Ownership

40.4% of Rocket Fuel shares are held by institutional investors. Comparatively, 83.6% of MDC Partners shares are held by institutional investors. 34.9% of Rocket Fuel shares are held by company insiders. Comparatively, 3.4% of MDC Partners shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Rocket Fuel and MDC Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rocket Fuel N/A N/A N/A ($1.50) -1.73
MDC Partners $1.39 billion 0.45 -$47.94 million $0.32 33.44

Rocket Fuel has higher earnings, but lower revenue than MDC Partners. Rocket Fuel is trading at a lower price-to-earnings ratio than MDC Partners, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Rocket Fuel has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, MDC Partners has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Rocket Fuel and MDC Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rocket Fuel 0 2 1 0 2.33
MDC Partners 0 4 2 0 2.33

Rocket Fuel presently has a consensus price target of $4.38, indicating a potential upside of 68.27%. MDC Partners has a consensus price target of $12.00, indicating a potential upside of 12.15%. Given Rocket Fuel’s higher probable upside, research analysts plainly believe Rocket Fuel is more favorable than MDC Partners.

Profitability

This table compares Rocket Fuel and MDC Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rocket Fuel -20.05% -120.35% -28.17%
MDC Partners 1.79% -7.92% 2.42%

Summary

MDC Partners beats Rocket Fuel on 8 of the 10 factors compared between the two stocks.

Rocket Fuel Company Profile

Rocket Fuel Inc. is a technology company, which offers a Programmatic Marketing Platform that is designed for helping marketers and their agencies to connect with consumers through digital media. The Company’s service offerings are organized around platforms, including Data Management Platform (DMP) and Demand Side Platform (DSP), which are used by customers themselves or integrating with other customer relationship management or marketing platforms, and together in various permutations as its Programmatic Marketing Platform. The integrated platform is designed to deliver and optimize media spend to engage, upsell and retarget consumers across addressable channels, including display, mobile and video, and across addressable devices, such as tablets, set top boxes, television and mobile phones. It offers Programmatic Marketing Platform as a managed service, which it operate on behalf of its customers, and as a self-service platform operated by its customers or their agencies directly.

MDC Partners Company Profile

MDC Partners Inc. is a provider of global marketing, advertising, activation, communications and strategic consulting solutions. The Company and its subsidiary agencies (Partner Firms) deliver a range of customized services. The Company’s segments include Reportable Segment, All Other and Corporate. The Reportable segment consists of the Company’s integrated advertising, media and public relations service companies. The All Other segment consists of the companies that provide the Company’s specialist marketing offerings, such as direct marketing, sales promotion, market research, strategic communications, database and customer relationship management, data analytics and insights, corporate identity, and design and branding. The Reportable segment includes the operations of various companies, such as Allison & Partners, Anomaly, Crispin Porter + Bogusky, Doner, Forsman & Bodenfors, Hunter PR, kbs, MDC Media Partners and 72andSunny.

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