Cars.com (NASDAQ: CARS) and Tucows (NASDAQ:TCX) are both small-cap internet services – nec companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Institutional & Insider Ownership

45.8% of Tucows shares are held by institutional investors. 13.2% of Tucows shares are held by 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.

Analyst Ratings

This is a breakdown of recent recommendations for Cars.com and Tucows, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cars.com 0 1 2 0 2.67
Tucows 0 0 0 0 N/A

Cars.com currently has a consensus target price of $34.00, indicating a potential upside of 49.52%. Given Cars.com’s higher possible upside, equities research analysts plainly believe Cars.com is more favorable than Tucows.

Earnings and Valuation

This table compares Cars.com and Tucows’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cars.com N/A N/A N/A $1.70 13.38
Tucows $189.82 million 3.21 $16.06 million $1.43 40.28

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

Profitability

This table compares Cars.com and Tucows’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cars.com 15.84% 5.13% 3.92%
Tucows 4.85% 35.17% 5.02%

Summary

Tucows beats Cars.com on 5 of the 9 factors compared between the two stocks.

About Cars.com

Cars.com Inc. owns a digital automotive marketplace business (Cars.com). Cars.com is an online research destination for car shoppers. The Company is engaged in the sale of online subscription advertising products targeting car dealerships. It offers a suite of products and services targeting the automotive needs of its buyer and seller customers. Cars.com offers a digital automotive marketplace search engine that helps car buyers to make informed purchasing decisions and helps sellers to engage with a portion of their target customer base. This online automotive marketplace service connects buyers and sellers across five Websites: Cars.com, Auto.com, DealerRater.com, NewCars.com and PickupTrucks.com. Its automotive marketplace products also include credible user and automotive and dealer reviews. It is also engaged in the sale of display advertising to national advertisers. Car buyers and car owners interface with Cars.com primarily through the Cars.com sites and mobile applications.

About Tucows

Tucows Inc. is engaged in providing Internet services. The Company’s segments include Network Access Services and Domain Services. The Network Access Services segment includes mobile, fixed high-speed Internet access services, Internet hosting and network consulting services. The Domain Services segment wholesale and retail domain name registration services, value added services and portfolio services. The Company focuses on serving the needs of this network of resellers by providing services, interfaces, proactive and attentive customer service, reseller-oriented technology and agile design and development processes. The Company focuses its service offerings under brands, including OpenSRS, YummyNames, Platypus, Hover and Ting. As of December 31, 2016, the OpenSRS Domain Service managed 15 million domain names under the Tucows ICANN registrar accreditation and for other registrars. As of December 31, 2016, Ting managed mobile telephony services for approximately 151,000 subscribers.

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