Analyzing Leaf Group (LFGR) and TrueCar (TRUE)

Leaf Group (NASDAQ: LFGR) and TrueCar (NASDAQ:TRUE) are both small-cap technology companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Insider & Institutional Ownership

84.6% of TrueCar shares are owned by institutional investors. 17.3% of TrueCar shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Leaf Group -36.78% -53.54% -42.55%
TrueCar -9.86% -11.00% -8.49%

Analyst Ratings

This is a summary of current recommendations for Leaf Group and TrueCar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Leaf Group 0 1 4 0 2.80
TrueCar 1 2 7 0 2.60

Leaf Group presently has a consensus target price of $10.30, suggesting a potential upside of 48.20%. TrueCar has a consensus target price of $18.50, suggesting a potential upside of 10.98%. Given Leaf Group’s stronger consensus rating and higher possible upside, analysts plainly believe Leaf Group is more favorable than TrueCar.

Valuation & Earnings

This table compares Leaf Group and TrueCar’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Leaf Group $117.85 million 1.20 -$21.14 million N/A N/A
TrueCar $306.80 million 5.35 -$16.51 million ($0.35) -47.63

TrueCar has higher revenue and earnings than Leaf Group.

Summary

TrueCar beats Leaf Group on 9 of the 11 factors compared between the two stocks.

Leaf Group Company Profile

Leaf Group Ltd., formerly Demand Media, Inc., is diversified Internet marketplaces and media company. The Company has online media properties and marketplace platforms that enable communities of creators to reach audiences in lifestyle categories. The Company operates an online studio platform for the professional creation and distribution of content, as well as two online artist marketplaces. Its business comprises two service offerings: Content & Media and Marketplaces. The Company creates media content, including text articles, videos, photographs and designed visual formats, and publishes such content to its owned and operated online properties and to its customers’ online properties. The Company also offers its content creation and distribution platform to provide custom content and other content marketing solutions to brands, publishers and advertisers.

TrueCar Company Profile

TrueCar, Inc. is an Internet-based information, technology, and communication services company. The Company has a data-driven online platform, which features market data and analytics. The Company-branded platform is available on its TrueCar Website and mobile applications. It customizes and operates its platform on a co-branded basis for its affinity group marketing partners, including financial institutions, membership-based organizations, and employee buying programs for a range of enterprises. The Company enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar Certified Dealers. Its network of over 13,000 TrueCar Certified Dealers consists primarily of new car franchises, as well as independent dealers selling used vehicles. Its subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time.

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