Financial Review: Marchex (NASDAQ:MCHX) and Heritage Global (NASDAQ:HGBL)

Heritage Global (NASDAQ:HGBL) and Marchex (NASDAQ:MCHX) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, profitability, risk, earnings, analyst recommendations and valuation.

Volatility and Risk

Heritage Global has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Marchex has a beta of 1.95, suggesting that its share price is 95% more volatile than the S&P 500.

Insider & Institutional Ownership

33.5% of Heritage Global shares are held by institutional investors. Comparatively, 73.5% of Marchex shares are held by institutional investors. 12.0% of Heritage Global shares are held by insiders. Comparatively, 20.3% of Marchex shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Heritage Global and Marchex’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Global	$60.54 million	1.50	$12.48 million	$0.33	7.39
Marchex	$49.91 million	1.19	-$9.91 million	($0.23)	-5.91

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Heritage Global and Marchex, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Global	0	0	2	0	3.00
Marchex	0	0	0	0	N/A

Heritage Global presently has a consensus price target of $5.25, suggesting a potential upside of 115.16%. Given Heritage Global’s higher possible upside, analysts plainly believe Heritage Global is more favorable than Marchex.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Global	20.60%	23.50%	16.22%
Marchex	-19.85%	-21.51%	-16.41%

Summary

Heritage Global beats Marchex on 10 of the 13 factors compared between the two stocks.

About Heritage Global

Heritage Global Inc., together with its subsidiaries, operates as an asset services company with focus on financial and industrial asset transactions. The company operates in three segments: Auction and Liquidation, Refurbishment & Resale, and Brokerage. It provides a suite of market making, acquisitions, refurbishment, dispositions, valuations, and secured lending services. The company focuses on identifying, valuing, acquiring, and monetizing underlying tangible assets. It acts as an adviser, as well as a principal, acquiring, or brokering manufacturing facilities; surplus industrial machinery and equipment; industrial inventories; and charged-off receivable portfolios. The company was formerly known as Counsel RB Capital Inc. and changed its name to Heritage Global, Inc. in August 2013. Heritage Global, Inc. was founded in 1937 and is headquartered in San Diego, 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.