Financial Survey: MeridianLink (NYSE:MLNK) versus Fathom (NASDAQ:FTHM)

MeridianLink (NYSE:MLNK) and Fathom (NASDAQ:FTHM) are both small-cap business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

82.7% of MeridianLink shares are held by institutional investors. Comparatively, 55.5% of Fathom shares are held by institutional investors. 6.0% of MeridianLink shares are held by company insiders. Comparatively, 16.4% of Fathom shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

MeridianLink has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Fathom has a beta of 1.85, suggesting that its stock price is 85% more volatile than the S&P 500.

Earnings and Valuation

This table compares MeridianLink and Fathom”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MeridianLink	$316.30 million	4.67	-$29.77 million	($0.29)	-68.78
Fathom	$335.18 million	0.16	-$21.58 million	($1.06)	-1.75

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

Profitability

This table compares MeridianLink and Fathom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MeridianLink	-6.90%	-4.50%	-1.95%
Fathom	-6.04%	-53.57%	-29.66%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for MeridianLink and Fathom, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MeridianLink	2	6	0	0	1.75
Fathom	0	0	1	0	3.00

MeridianLink currently has a consensus target price of $20.07, indicating a potential upside of 0.62%. Given MeridianLink’s higher probable upside, analysts clearly believe MeridianLink is more favorable than Fathom.

Summary

Fathom beats MeridianLink on 8 of the 14 factors compared between the two stocks.

About MeridianLink

MeridianLink, Inc., a software and services company, provides software solutions for banks, credit unions, mortgage lenders, specialty lending providers, and consumer reporting agencies in the United States. The company offers MeridianLink One, a multi-product platform that can be tailored to meet the needs of customers as they digitally transform their organizations and adapt to changing business and consumer demands; MeridianLink Portal, a Point of Sale system that allows financial institutions to expand existing lending and deposit account; MeridianLink Opening, a cloud-based online account opening and deposit software solution; MeridianLink Consumer, a full loan solution suite to banks and credit unions; and MeridianLink DecisionLender, a loan origination software (LOS) for finance companies. It also provides MeridianLink Mortgage, a cloud-based software designed for financial professionals to optimize the end-to-end mortgage loan origination process; MeridianLink Collect, a web-based debt collection software; Mortgage Credit Link, a web-based order fulfillment hub; and MeridianLink Business, a cloud-based platform that offers business lending solutions for banks and credit unions. In addition, the company provides analytics and business intelligence tools through MeridianLink Engage, MeridianLink Consulting, MeridianLink Data Connect, and MeridianLink Insight; Data Verification Software Solution, a cloud-based order fulfillment hub for bankers and credit officers; and loan origination systems, other credit decisioning tools, and additional solution modules. MeridianLink, Inc. was founded in 1998 and is headquartered in Costa Mesa, California.

About Fathom

Fathom Holdings Inc. provides a real estate services platform that integrates residential brokerage, mortgage, title, and insurance services in the United States. It operates through three segments: Real Estate Brokerage, Mortgage, and Technology. The Real Estate Brokerage segment provides real estate brokerage services. The Mortgage segment offers residential loan origination and underwriting services. The Technology segment provides Software as a Service solutions and data mining for third party customers. It offers access to various properties for sale or lease through its FathomRealty.com website to buyers, sellers, landlords, and tenants; insurance agency services; and title services. In addition, the company provides intelliAgent, a real estate technology platform that offers a suite of brokerage and agent level tools, technology, business processes, business intelligence and reporting, and training; transaction, personnel, customer relationship, and accounting management for agent transactions; and reporting, social media marketing, and other marketing and marketing repository services, as well as marketplace for add-on services and third-party technology. Its brands include Fathom Realty, Dagley Insurance, Encompass Lending, intelliAgent, LiveBy, Real Results, Verus Title, and Cornerstone. The company was founded in 2010 and is headquartered in Cary, North Carolina.