Marchex (NASDAQ: MCHX) and Millennial Media (NYSE:MM) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

48.5% of Marchex shares are held by institutional investors. 27.4% of Marchex shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Marchex and Millennial Media’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marchex -11.72% -7.76% -6.92%
Millennial Media -23.47% -26.25% -19.24%

Earnings and Valuation

This table compares Marchex and Millennial Media’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Marchex $129.55 million 1.07 -$84.06 million ($0.27) -11.78
Millennial Media N/A N/A N/A ($1.37) -1.28

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

Analyst Ratings

This is a summary of recent ratings and target prices for Marchex and Millennial Media, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marchex 0 1 0 0 2.00
Millennial Media 0 0 0 0 N/A

Marchex currently has a consensus price target of $3.00, indicating a potential downside of 5.66%. Given Marchex’s higher possible upside, equities analysts plainly believe Marchex is more favorable than Millennial Media.

Summary

Marchex beats Millennial Media on 8 of the 8 factors compared between the two stocks.

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.

About Millennial Media

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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