Head to Head Review: AutoWeb (NASDAQ:AUTO) and Direct Digital (NASDAQ:DRCT)

Direct Digital (NASDAQ:DRCTGet Rating) and AutoWeb (NASDAQ:AUTOGet Rating) are both small-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Valuation and Earnings

This table compares Direct Digital and AutoWeb’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Direct Digital $38.14 million 0.15 N/A N/A N/A
AutoWeb $71.58 million 0.08 -$5.66 million ($0.77) -0.53

Direct Digital has higher earnings, but lower revenue than AutoWeb.

Insider and Institutional Ownership

9.6% of Direct Digital shares are held by institutional investors. Comparatively, 20.8% of AutoWeb shares are held by institutional investors. 41.8% of AutoWeb shares are held by 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 Direct Digital and AutoWeb’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Direct Digital N/A N/A N/A
AutoWeb -14.11% -76.04% -28.23%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Direct Digital and AutoWeb, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Direct Digital 0 0 3 0 3.00
AutoWeb 1 1 0 0 1.50

Direct Digital presently has a consensus price target of $5.83, suggesting a potential upside of 187.36%. AutoWeb has a consensus price target of $2.92, suggesting a potential upside of 608.96%. Given AutoWeb’s higher probable upside, analysts plainly believe AutoWeb is more favorable than Direct Digital.

Summary

Direct Digital beats AutoWeb on 6 of the 10 factors compared between the two stocks.

About Direct Digital

(Get Rating)

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, etc. with focus on small- and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.

About AutoWeb

(Get Rating)

AutoWeb, Inc. operates as a digital marketing company for the automotive industry in the United States. It assists automotive retail dealers and manufacturers to market and sell new and used vehicles to consumers through its programs. The company's products include new vehicle lead program, which allows consumers to submit requests for pricing and availability of specific makes and models; and used vehicle lead program, which allows consumers to search for used vehicles according to specific search parameters, such as price, make, model, mileage, year, and location of the vehicle. Its products and services also comprise WebLeads+ that offers various coupon options, which display marketing messages to consumers visiting the dealer's website; and Payment Pro, a dealer website conversion tool that offers consumers real-time online monthly payment information, as well as sells fixed placement advertising across its Website to automotive advertisers. It owns and operates automotive websites that offers consumers with the information and tools to aid them with their automotive purchase decisions; direct marketing platform that enables manufacturers to selectively target in-market consumers during the often-extended vehicle shopping process; and click traffic referral program, a pay-per-click advertising program that offer targeted offers to consumers based on make, model, and geographic location. The company was formerly known as Autobytel Inc. and changed its name to AutoWeb, Inc. in October 2017. AutoWeb, Inc. was founded in 1995 and is headquartered in Tampa, Florida.

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