Reviewing Marchex (NASDAQ:MCHX) & TrueCar (NASDAQ:TRUE)

TrueCar (NASDAQ:TRUE) and Marchex (NASDAQ:MCHX) are both small-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, risk, earnings, profitability, analyst recommendations, dividends and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TrueCar	-10.27%	-23.76%	-18.02%
Marchex	-10.38%	-13.57%	-10.40%

Valuation & Earnings

This table compares TrueCar and Marchex”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TrueCar	$181.22 million	1.25	-$31.05 million	($0.22)	-11.55
Marchex	$46.49 million	1.49	-$4.95 million	($0.11)	-14.27

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

Risk and Volatility

TrueCar has a beta of 2.22, indicating that its share price is 122% more volatile than the S&P 500. Comparatively, Marchex has a beta of 2.03, indicating that its share price is 103% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for TrueCar and Marchex, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TrueCar	2	5	0	0	1.71
Marchex	1	1	0	0	1.50

TrueCar presently has a consensus target price of $2.65, suggesting a potential upside of 4.33%. Given TrueCar’s stronger consensus rating and higher probable upside, analysts plainly believe TrueCar is more favorable than Marchex.

Insider and Institutional Ownership

79.4% of TrueCar shares are held by institutional investors. Comparatively, 73.5% of Marchex shares are held by institutional investors. 3.9% of TrueCar shares are held by company insiders. Comparatively, 23.5% of Marchex shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

TrueCar beats Marchex on 7 of the 13 factors compared between the two stocks.

About TrueCar

TrueCar, Inc. operates as an internet-based information, technology, and communication services company in the United States. It operates its platform on the TrueCar website and mobile applications. Its platform enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar certified dealers. The company also offers forecast and consulting services regarding determination of the residual value of an automobile at given future points in time, which are used to underwrite automotive loans and leases, and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. In addition, it provides TrueCar Trade, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership; and DealerScience that provides dealers with advanced digital retailing software tools. The company was formerly known as Zag.com Inc. The company was incorporated in 2005 and is headquartered in Santa Monica, California.

About Marchex

Marchex, Inc., a conversation intelligence company, provides conversational analytics and related solutions in the United States, Canada, and internationally. Its products include Marketing Edge that identifies which campaigns and channels are driving inbound conversations, evaluates what happens during those conversations, and closes the sales loop by connecting converted sales to marketing driven leads; Sonar Business Text Messaging, an artificial intelligence (AI) empowered intelligent workflow enabled mobile messaging solution that enables operations, sales, and marketing teams to communicate personally with field staff, prospects, and customers; Marchex Platform Services, a robust API-based conversation intelligence product that allows executives, sales, customer engagement, and marketing teams to apply Marchex AI to most any calls, regardless of communication platform, in order to identify actionable insights from conversations with their customers; Spotlight, an AI conversation analytics product for multi-location businesses; and Engage, a solution that provides locations with applications to enhance their overall performance. The company was incorporated in 2003 and is headquartered in Seattle, Washington.