Head-To-Head Review: Connecture (CNXR) versus TrueCar (TRUE)

Connecture (OTCMKTS: CNXR) and TrueCar (NASDAQ:TRUE) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Valuation & Earnings

This table compares Connecture and TrueCar’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Connecture $81.89 million 0.04 -$26.53 million ($0.92) -0.17
TrueCar $277.51 million 4.04 -$41.70 million ($0.36) -31.11

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

Analyst Recommendations

This is a summary of current ratings for Connecture and TrueCar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Connecture 0 0 0 0 N/A
TrueCar 0 3 6 0 2.67

TrueCar has a consensus target price of $17.44, suggesting a potential upside of 55.75%. Given TrueCar’s higher possible upside, analysts plainly believe TrueCar is more favorable than Connecture.

Profitability

This table compares Connecture and TrueCar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Connecture -19.38% N/A -17.70%
TrueCar -10.29% -10.38% -8.12%

Risk and Volatility

Connecture has a beta of 1.94, meaning that its stock price is 94% more volatile than the S&P 500. Comparatively, TrueCar has a beta of 2.71, meaning that its stock price is 171% more volatile than the S&P 500.

Institutional & Insider Ownership

38.8% of Connecture shares are held by institutional investors. Comparatively, 92.2% of TrueCar shares are held by institutional investors. 68.6% of Connecture shares are held by insiders. Comparatively, 15.5% of TrueCar shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

TrueCar beats Connecture on 9 of the 12 factors compared between the two stocks.

Connecture Company Profile

Connecture, Inc. provides a Web-based consumer shopping, enrollment and retention platform for health insurance distribution. The Company caters its services to health insurance marketplace operators, such as health plans, brokers and exchange operators. It operates through four segments: Enterprise/Commercial, Enterprise/State, Medicare and Private Exchange. The Enterprise/Commercial segment offers insurance distribution solutions to health plans. The Enterprise/State segment offers the sales automation solutions to state Governments, which allow its customers to offer customized individual and small group exchanges. The Medicare segment offers Web-based Medicare plan comparison, prescription drug comparison and enrollment tools for health plans, pharmacy benefit managers, pharmacies, field marketing organizations and call centers. The Private Exchange segment offers defined-contribution benefit exchange solutions to benefit consultants, brokers, exchange operators and aggregators.

TrueCar Company Profile

TrueCar, Inc. is an Internet-based information, technology, and communication services company. The Company has a data-driven online platform, which features market data and analytics. The Company-branded platform is available on its TrueCar Website and mobile applications. It customizes and operates its platform on a co-branded basis for its affinity group marketing partners, including financial institutions, membership-based organizations, and employee buying programs for a range of enterprises. The Company enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar Certified Dealers. Its network of over 13,000 TrueCar Certified Dealers consists primarily of new car franchises, as well as independent dealers selling used vehicles. Its subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time.

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