Financial Survey: Radio One (NASDAQ:UONE) and Direct Digital (NASDAQ:DRCT)

Radio One (NASDAQ:UONE) and Direct Digital (NASDAQ:DRCT) are both small-cap communication services companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.

Earnings and Valuation

This table compares Radio One and Direct Digital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radio One	$374.37 million	0.06	-$146.87 million	($30.93)	-0.16
Direct Digital	$34.69 million	0.05	-$18.95 million	($201.62)	-0.01

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

Volatility and Risk

Radio One has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, Direct Digital has a beta of 5.32, indicating that its stock price is 432% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Radio One and Direct Digital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radio One	1	0	0	0	1.00
Direct Digital	1	1	0	0	1.50

Insider and Institutional Ownership

8.2% of Radio One shares are held by institutional investors. Comparatively, 4.0% of Direct Digital shares are held by institutional investors. 47.2% of Radio One shares are held by insiders. Comparatively, 25.6% of Direct Digital shares are held by 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 Radio One and Direct Digital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Radio One	-38.41%	32.35%	2.58%
Direct Digital	-65.75%	N/A	-59.57%

Summary

Radio One beats Direct Digital on 8 of the 12 factors compared between the two stocks.

About Radio One

Urban One, Inc., together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Cable Television, Reach Media, and Digital. The Radio Broadcasting segment includes radio broadcasting operations that primarily target African-American and urban listeners. As of April 30, 2023, it owned and/or operated 66 broadcast stations, including 55 FM or AM stations, 9 HD stations, and the 2 low power television stations under the Radio One tradename located in 13 urban markets. The Cable Television segment operates TV One, an African-American targeted cable television network; and CLEO TV, a lifestyle and entertainment network. The Reach Media segment operates syndicated programming, including the Get Up! Mornings with Erica Campbell Show, Rickey Smiley Morning Show, the Russ Parr Morning Show, and the DL Hughley Show. This segment also operates BlackAmericaWeb.com, an African-American targeted news and entertainment website, as well as other event related activities. The Digital segment owns Interactive One, a digital platform serving the African-American community through social content, news, information, and entertainment websites, including Cassius and Bossip, HipHopWired, and MadameNoire digital platforms and brands. The company was formerly known as Radio One, Inc. and changed its name to Urban One, Inc. in May 2017. Urban One, Inc. was founded in 1980 and is based in Silver Spring, Maryland.

About Direct Digital

Direct Digital Holdings, Inc. operates as an end-to-end full-service programmatic advertising platform. The company's platform primarily focuses on providing advertising technology, data-driven campaign optimization, and other solutions to underserved and less efficient markets on both the buy- and sell-side of the digital advertising ecosystem. It serves various industry verticals, such as travel, healthcare, education, financial services, consumer products, and other sectors with a focus on small and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.