Star Fashion Culture (NASDAQ:STFS) vs. Direct Digital (NASDAQ:DRCT) Critical Review

Direct Digital (NASDAQ:DRCT) and Star Fashion Culture (NASDAQ:STFS) are both small-cap business services companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

4.0% of Direct Digital shares are held by institutional investors. 25.6% of Direct Digital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Direct Digital has a beta of 5.95, indicating that its share price is 495% more volatile than the S&P 500. Comparatively, Star Fashion Culture has a beta of -0.11, indicating that its share price is 111% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Direct Digital and Star Fashion Culture, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Direct Digital	1	1	1	0	2.00
Star Fashion Culture	1	0	0	0	1.00

Direct Digital presently has a consensus target price of $6.00, indicating a potential upside of 11,242.16%. Given Direct Digital’s stronger consensus rating and higher probable upside, analysts plainly believe Direct Digital is more favorable than Star Fashion Culture.

Valuation & Earnings

This table compares Direct Digital and Star Fashion Culture”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Direct Digital	$62.29 million	0.03	-$6.24 million	($1.36)	-0.04
Star Fashion Culture	$16.86 million	0.06	-$18.26 million	N/A	N/A

Direct Digital has higher revenue and earnings than Star Fashion Culture.

Profitability

This table compares Direct Digital and Star Fashion Culture’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Direct Digital	-26.76%	N/A	-39.57%
Star Fashion Culture	N/A	N/A	N/A

Summary

Direct Digital beats Star Fashion Culture on 8 of the 11 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 Star Fashion Culture

Star Fashion Culture Holdings Limited provides content marketing solutions services in the People’s Republic of China. It offers marketing campaign planning and execution services; offline advertising services; and online precision marketing services. The company was founded in 2015 and is based in Xiamen, the People’s Republic of China. Star Fashion Culture Holdings Limited operates as a subsidiary of Xingji ZhangPingting Limited.