Analyzing Net Element International (NETE) & Leaf Group (LFGR)

Net Element International (NASDAQ: NETE) and Leaf Group (NYSE:LFGR) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Earnings & Valuation

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This table compares Net Element International and Leaf Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Net Element International $60.06 million 0.56 -$9.91 million ($5.04) -1.74
Leaf Group $128.99 million 1.43 -$31.13 million ($1.34) -5.63

Net Element International has higher earnings, but lower revenue than Leaf Group. Leaf Group is trading at a lower price-to-earnings ratio than Net Element International, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Net Element International and Leaf Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Net Element International -16.50% -181.44% -38.14%
Leaf Group -24.14% -47.38% -35.54%

Insider & Institutional Ownership

3.7% of Net Element International shares are owned by institutional investors. Comparatively, 54.8% of Leaf Group shares are owned by institutional investors. 27.9% of Net Element International shares are owned by company insiders. Comparatively, 47.6% of Leaf Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Net Element International has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, Leaf Group has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Net Element International and Leaf Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Net Element International 0 0 0 0 N/A
Leaf Group 0 1 2 0 2.67

Leaf Group has a consensus price target of $10.50, suggesting a potential upside of 39.07%. Given Leaf Group’s higher probable upside, analysts clearly believe Leaf Group is more favorable than Net Element International.

Summary

Leaf Group beats Net Element International on 9 of the 13 factors compared between the two stocks.

About Net Element International

Net Element, Inc. operates as a financial technology and value-added solutions company worldwide. It operates in three segments: North America Transaction Solutions, Mobile Solutions, and Online Solutions. The North America Transaction Solutions segment provides technology and services that businesses require to accept cashless transaction for retail card-present, e-commerce, or card-not-present mail order/telephone order transactions; and Aptito, a cloud-based point of sale (POS) platform, which includes hospitality, mobile POS, and small to medium sized business retail POS applications, as well as offers mobile payment and merchant back office reporting services, and merchant performance analytical tools. The Mobile Solutions segment provides an integrated mobile billing and mobile commerce solution for digital merchants, such as social networks, game developers, online magazines, mobile applications, and digital media operators to monetize their content in a mobile environment. It also offers various mobile payment solutions for Web services and mobile applications. This segment enables mobile users to pay for purchases through mobile devices, interactive devices, or Web without a credit card or a bank account. The Online Solutions segment operates PayOnline, a software-as-a-service suite of solutions for electronic and mobile commerce gateway and payment processing platform that facilitate payment acceptance and processing through point-to-point encryption and tokenization solutions. It operates in North America, the Russian Federation, and the Commonwealth of Independent States. The company was formerly known as Net Element International, Inc. and changed its name to Net Element, Inc. in December 2013. Net Element, Inc. was founded in 2004 and is headquartered in North Miami Beach, Florida.

About Leaf Group

Leaf Group Ltd., together with its subsidiaries, operates as a diversified consumer Internet company worldwide. The company operates in two segments, Marketplaces and Media. The Marketplaces segment offers Society6.com, which provides artists with an online commerce platform to feature and sell their original art and designs on consumer products in the home décor, accessories, and apparel categories; and Deny Designs, an artist-driven home décor brand. This segment also provides Saatchi Art, an online art gallery featuring a selection of original paintings, drawings, sculpture, and photography that provides a global community of artists an environment to exhibit and sell their work directly to consumers. The Media segment offers Livestrong.com, a healthy living destination with a library of health, fitness, lifestyle, and nutrition articles and videos; Hunker, an online destination for home and space inspiration, original home tours, practical do-it-yourself solutions, and design advice for people; Cuteness.com, a community for pet owners and animal lovers; and eHow, an online resource providing inspiration and solutions for do-it-yourself projects and crafts. This segment also provides content creation services; traffic sources; mobile applications; and monetization solutions, as well as develops partner sites. Leaf Group Ltd. sells its products through wholesale channels to trade and hospitality clients, as well as through retail distribution partners. The company was formerly known as Demand Media, Inc. and changed its name to Leaf Group Ltd. in November 2016. Leaf Group Ltd. was founded in 2006 and is headquartered in Santa Monica, California.

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