Rocket Fuel (NASDAQ: FUEL) and XO Group (NYSE:XOXO) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Valuation and Earnings

This table compares Rocket Fuel and XO Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rocket Fuel $420.47 million 0.29 -$16.55 million ($1.50) -1.73
XO Group $155.73 million 2.98 $14.12 million $0.27 68.97

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

Risk & Volatility

Rocket Fuel has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, XO Group has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Rocket Fuel and XO Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rocket Fuel 1 3 0 0 1.75
XO Group 0 2 3 0 2.60

Rocket Fuel presently has a consensus price target of $3.48, indicating a potential upside of 34.17%. XO Group has a consensus price target of $20.15, indicating a potential upside of 8.22%. Given Rocket Fuel’s higher probable upside, analysts plainly believe Rocket Fuel is more favorable than XO Group.

Profitability

This table compares Rocket Fuel and XO Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rocket Fuel -16.39% -54.16% -14.86%
XO Group 4.55% 4.71% 3.89%

Insider & Institutional Ownership

40.4% of Rocket Fuel shares are owned by institutional investors. Comparatively, 83.6% of XO Group shares are owned by institutional investors. 34.9% of Rocket Fuel shares are owned by insiders. Comparatively, 6.8% of XO Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

XO Group beats Rocket Fuel on 10 of the 13 factors compared between the two stocks.

Rocket Fuel Company Profile

Rocket Fuel Inc. is a technology company, which offers a Programmatic Marketing Platform that is designed for helping marketers and their agencies to connect with consumers through digital media. The Company’s service offerings are organized around platforms, including Data Management Platform (DMP) and Demand Side Platform (DSP), which are used by customers themselves or integrating with other customer relationship management or marketing platforms, and together in various permutations as its Programmatic Marketing Platform. The integrated platform is designed to deliver and optimize media spend to engage, upsell and retarget consumers across addressable channels, including display, mobile and video, and across addressable devices, such as tablets, set top boxes, television and mobile phones. It offers Programmatic Marketing Platform as a managed service, which it operate on behalf of its customers, and as a self-service platform operated by its customers or their agencies directly.

XO Group Company Profile

XO Group Inc. is engaged in providing content and marketing solutions, targeted advertising programs, transactions and merchandise. The Company’s multi-platform brands guide couples through transformative life stages from getting married with The Knot, to moving in together with The Nest, to having a baby with The Bump, and helping bring celebrations to life with entertainment vendors from GigMasters.com Incorporated (GigMasters). The Knot is the wedding resource and marketplace that engages, matches and connects couples. The Bump is a pregnancy and parenting brand, providing personalized information, content and tools. The Nest is a brand focused on nesters setting up homes and navigating their lives together. GigMasters is an event marketplace for finding and booking the entertainment and vendors for birthday parties, weddings, anniversaries and corporate events, among others. The Company’s product offerings include Online Media Advertising, Transactions, and Publishing and Other.

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