Financial Comparison: Trade Desk (NASDAQ:TTD) vs. Direct Digital (NASDAQ:DRCT)

Direct Digital (NASDAQ:DRCT) and Trade Desk (NASDAQ:TTD) are both communication services companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, institutional ownership, earnings and risk.

Profitability

This table compares Direct Digital and Trade Desk’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Direct Digital	-74.38%	N/A	-68.48%
Trade Desk	13.61%	16.09%	6.90%

Institutional & Insider Ownership

4.0% of Direct Digital shares are owned by institutional investors. Comparatively, 67.8% of Trade Desk shares are owned by institutional investors. 25.6% of Direct Digital shares are owned by company insiders. Comparatively, 11.4% of Trade Desk shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Direct Digital has a beta of 5.3, indicating that its share price is 430% more volatile than the S&P 500. Comparatively, Trade Desk has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Direct Digital and Trade Desk, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Direct Digital	1	0	0	0	1.00
Trade Desk	10	25	4	0	1.85

Trade Desk has a consensus price target of $19.36, suggesting a potential upside of 38.58%. Given Trade Desk’s stronger consensus rating and higher probable upside, analysts plainly believe Trade Desk is more favorable than Direct Digital.

Earnings & Valuation

This table compares Direct Digital and Trade Desk”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	$34.69 million	0.04	-$18.95 million	($156.85)	-0.01
Trade Desk	$2.90 billion	2.27	$443.30 million	$0.84	16.63

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

Summary

Trade Desk beats Direct Digital on 12 of the 14 factors compared between the two stocks.

About Direct Digital

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

About Trade Desk

The Trade Desk, Inc. operates as a technology company in the United States and internationally. The company offers a self-service cloud-based platform that allows buyers to plan, manage, optimize, and measure data-driven digital advertising campaigns across various ad formats and channels, including video, display, audio, digital-out-of-home, native, and social on various devices, such as computers, mobile devices, televisions, and streaming devices. It provides data and other value-added services. The company serves advertising agencies, brands, and other service providers for advertisers. The Trade Desk, Inc. was incorporated in 2009 and is headquartered in Ventura, California.