Marchex (NASDAQ:MCHX) versus Heritage Global (NASDAQ:HGBL) Financial Analysis

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

Profitability

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

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marchex	$49.91 million	1.19	-$9.91 million	($0.23)	-5.91
Heritage Global	$60.55 million	1.50	$12.48 million	$0.33	7.39

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 ratings and target prices for Marchex and Heritage Global, as provided by MarketBeat.

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

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

Risk and Volatility

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

Institutional and Insider Ownership

73.5% of Marchex shares are owned by institutional investors. Comparatively, 33.5% of Heritage Global shares are owned by institutional investors. 20.3% of Marchex shares are owned by insiders. Comparatively, 12.0% of Heritage Global shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

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

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.

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.