Rocket Fuel (NASDAQ: FUEL) and Millennial Media (NYSE:MM) are both small-cap cyclical consumer goods & services companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.

Insider and Institutional Ownership

40.4% of Rocket Fuel shares are held by institutional investors. 34.9% of Rocket Fuel 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.

Profitability

This table compares Rocket Fuel and Millennial Media’s 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%
Millennial Media -23.47% -26.25% -19.24%

Analyst Ratings

This is a breakdown of current recommendations for Rocket Fuel and Millennial Media, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rocket Fuel 0 2 1 0 2.33
Millennial Media 0 0 0 0 N/A

Rocket Fuel currently has a consensus price target of $4.38, suggesting a potential upside of 68.27%. Given Rocket Fuel’s higher possible upside, research analysts clearly believe Rocket Fuel is more favorable than Millennial Media.

Earnings and Valuation

This table compares Rocket Fuel and Millennial Media’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Rocket Fuel N/A N/A N/A ($1.50) -1.73
Millennial Media N/A N/A N/A ($1.37) -1.28

Rocket Fuel is trading at a lower price-to-earnings ratio than Millennial Media, indicating that it is currently the more affordable of the two stocks.

Summary

Rocket Fuel beats Millennial Media on 5 of the 8 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.

Millennial Media Company Profile

Millennial Media, Inc. is an independent mobile advertising marketplace delivering products and services to advertisers and developers. The Company offers advertisers a suite of solutions that allow them to reach and connect with the target audiences across screens, from smartphones, tablets and other mobile devices to PCs. The Company offers developers the ability to maximize the advertising revenue and acquire new users for apps. Its advertiser and developer solutions support all mobile operating systems, including Apple iOS, Android, Windows Phone and BlackBerry. For clients who want a higher degree of customer service, the Company offers its managed media services with dedicated account teams. For its clients who want to interact with it on a more automated basis, the Company offers tools that allow advertisers to buy its ad supply in a programmatic fashion through its ad exchange and developers the opportunity to manage and monetize the ad inventory through its supply side tool.

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