MDC Partners (NASDAQ: MDCA) and ReachLocal (NASDAQ:RLOC) are both business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

83.6% of MDC Partners shares are owned by institutional investors. 3.4% of MDC Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
MDC Partners 1.79% -7.92% 2.42%
ReachLocal -5.20% N/A -15.27%

Analyst Ratings

This is a summary of recent recommendations for MDC Partners and ReachLocal, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MDC Partners 0 4 2 0 2.33
ReachLocal 0 0 0 0 N/A

MDC Partners presently has a consensus price target of $12.00, suggesting a potential upside of 3.00%.

Valuation & Earnings

This table compares MDC Partners and ReachLocal’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MDC Partners $1.39 billion 0.49 -$47.94 million $0.32 36.41
ReachLocal N/A N/A N/A ($1.65) N/A

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

Summary

MDC Partners beats ReachLocal on 7 of the 8 factors compared between the two stocks.

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.

ReachLocal Company Profile

ReachLocal, Inc. (ReachLocal) offers a range of online marketing and reporting solutions. The Company’s digital marketing solution consists of products and solutions in three categories: digital advertising (including ReachSearch, ReachDisplay, ReachDisplay InApp and ReachRetargeting); Web presence (including ReachSite+ReachEdge, ReachSEO, ReachCast, ReachListings and TotalLiveChat), and software (ReachEdge and Kickserv). It focuses on small to medium-sized businesses (SMBs). The Company delivers its suite of products and solutions to local businesses through a combination of its technology platform, its direct inside and outside sales force, and select third-party agencies and resellers. It also focuses on certain core verticals, which include home services, professional services, specialty services and healthcare. It also provides solutions to multi-location advertisers, such as franchises and other businesses that have multiple locations across a number of cities and states.

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