Critical Analysis: AppFolio (NASDAQ:APPF) & Marchex (NASDAQ:MCHX)

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

Volatility and Risk

AppFolio has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Marchex has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AppFolio	15.62%	33.56%	27.03%
Marchex	-12.44%	-18.25%	-13.94%

Institutional and Insider Ownership

85.2% of AppFolio shares are owned by institutional investors. Comparatively, 73.5% of Marchex shares are owned by institutional investors. 1.6% of AppFolio shares are owned by company insiders. Comparatively, 23.5% of Marchex shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AppFolio	$950.82 million	8.70	$140.92 million	$4.74	49.20
Marchex	$45.42 million	1.24	-$5.24 million	($0.12)	-10.58

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for AppFolio and Marchex, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AppFolio	0	3	9	0	2.75
Marchex	1	1	0	0	1.50

AppFolio presently has a consensus price target of $250.00, suggesting a potential upside of 7.19%. Given AppFolio’s stronger consensus rating and higher probable upside, analysts plainly believe AppFolio is more favorable than Marchex.

Summary

AppFolio beats Marchex on 11 of the 13 factors compared between the two stocks.

About AppFolio

AppFolio, Inc., together with its subsidiaries, provides cloud business management solutions for the real estate industry in the United States. The company provides a cloud-based platform that enables users to automate and optimize common workflows; tools that assist with leasing, maintenance, and accounting; and other technology and services offered by third parties. It offers AppFolio Property Manager Core, a platform that provides the basic functionalities required to operate a property management business, as well as serves as a system of record; AppFolio Property Manager Plus, which offers housing management, student housing management, complex accounting, leasing insights, large-scale operations support, role-based permissions, stack integrations, and enhanced customer support services; AppFolio Property Manager Max offers customer relationship management functionality, field customization, customer database functionality, and customer success management services; and AppFolio Investment Manager, a software that provides investment management, asset management, and relationship management solutions. The company also provides value-added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services. AppFolio, Inc. was incorporated in 2006 and is headquartered in Santa Barbara, 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.