MDC Partners (NASDAQ: MDCA) and Marchex (NASDAQ:MCHX) 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 institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Volatility and Risk

MDC Partners has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, Marchex has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Profitability

This table compares MDC Partners and Marchex’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MDC Partners -1.70% -5.72% 1.77%
Marchex -15.53% -10.65% -9.44%

Analyst Recommendations

This is a breakdown of recent ratings for MDC Partners and Marchex, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MDC Partners 0 4 3 0 2.43
Marchex 0 1 0 0 2.00

MDC Partners presently has a consensus target price of $12.17, indicating a potential upside of 16.99%. Marchex has a consensus target price of $3.00, indicating a potential downside of 3.54%. Given MDC Partners’ stronger consensus rating and higher possible upside, analysts clearly believe MDC Partners is more favorable than Marchex.

Insider & Institutional Ownership

83.7% of MDC Partners shares are owned by institutional investors. Comparatively, 49.7% of Marchex shares are owned by institutional investors. 3.4% of MDC Partners shares are owned by company insiders. Comparatively, 27.4% of Marchex shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares MDC Partners and Marchex’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MDC Partners $1.47 billion 0.41 $150.77 million ($0.56) -18.57
Marchex $105.54 million 1.26 -$12.35 million ($0.39) -7.97

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

Summary

MDC Partners beats Marchex on 10 of the 13 factors compared between the two stocks.

About MDC Partners

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.

About Marchex

Marchex, Inc. is a mobile advertising analytics company. The Company offers products and services for enterprises that depend on consumer phone calls to drive sales. Its media analytics products can provide actionable intelligence on media channels advertisers use to acquire customers over the phone. Its Marchex Omnichannel Analytics Cloud helps marketers connect customer conversions driven from paid media channels, including search, display and video, social and sites, to phone calls made to a business. Its product offerings include Marchex Call Analytics, Marchex Search Analytics, Marchex Display and Video Analytics, Marchex Social Analytics, Marchex Call Marketplace and Local Leads. Its Local Leads platform is a white-labeled, full service advertising solution for small business resellers, such as Yellow Pages providers and vertical marketing service providers, to sell call advertising, search marketing and other lead generation products.

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