The rising shift toward online platforms, rising utilization of Artificial Intelligence (AI) to enable precise audience targeting and real-time bidding, and increasing consumer demand are driving growth in the advertising market. Ad spending in the advertising market worldwide is forecasted to reach $1.08 trillion in 2024.
Additionally, the global AdTech market, encompassing technologies for managing digital advertising campaigns, is projected to record a high growth rate, driven by the shift to online media and the proliferation of data-driven marketing strategies. The U.S. AdTech market is poised to grow at a CAGR of 22.6% from 2024 to 2034.
Against this backdrop, let’s compare two Advertising stocks, Advantage Solutions Inc. (ADV) and Taboola.com Ltd. (TBLA), to analyze which Ad Tech stock is more click-worthy.
The Case for Advantage Solutions Inc. stock
Valued at $1.20 billion by market cap, Advantage Solutions Inc. (ADV) provides business solutions to consumer goods manufacturers and retailers in North America and internationally. It operates in two segments: Sales and Marketing.
ADV’s stock has declined 4.1% over the past month but gained 9% over the past three months to close the last trading session at $3.77.
In terms of forward EV/Sales, ADV is trading at 0.82x, 58.7% lower than the industry average of 1.99x. Likewise, its forward EV/EBIT is trading at 15.05x, marginally lower than the 15.10x industry average.
ADV’s 8.75% trailing-12-month EBITDA margin is 53% lower than the industry average of 18.58%. However, its 1.07x trailing-12-month asset turnover ratio is 112.9% higher than the industry average of 0.50x.
ADV’s total revenues for the second quarter that ended June 30, 2024, declined 8.1% year-over-year to $873.36 million. The company’s net loss and loss per common share attributable to stockholders of ADV came in at $100.84 million and $0.31, up significantly from the prior year’s quarter, respectively.
Street expects ADV’s revenue for the quarter ending September 31, 2024, to decline 22.3% year-over-year to $851.64 million. The company’s EPS for the same quarter is expected to gain 750.8% year-over-year to $0.11.
ADV’s POWR Ratings reflect its neutral outlook. The stock has an overall rating of C, which translates to a Neutral in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a C grade for Growth and Stability. Within the Advertising industry, it is ranked #15 out of 17 stocks. To see the additional grades of ADV for Value, Momentum, Sentiment, and Quality, click here.
The Case for Taboola.com Ltd. stock
Valued at $1.15 billion by market cap, Taboola.com Ltd. (TBLA) and its subsidiaries operate an artificial intelligence-based algorithmic engine platform internationally. It offers Taboola, a platform that partners with websites, devices, and mobile apps to recommend editorial content and advertisements on the open web to users.
TBLA’s stock has declined marginally over the past month to close the last trading session at $3.43.
In terms of the trailing-12-month asset turnover ratio, TBLA’s 0.97x is 92.8% higher than the 0.50x industry average.
For the second quarter that ended March 31, 2024, TBLA’s revenues increased 29% year-over-year to $428.20 million. Its gross profit rose 18.3% from the year-ago value to $114.78 million. Moreover, the company’s non-GAAP net income stood at $23.01 million, compared to a non-GAAP net loss of $1.41 million in the year-ago quarter, while adjusted EBITDA rose by 137.7% year-over-year to $37.23 million.
Analysts expect TBLA’s revenue for the quarter ending September 2024 to increase 19.2% year-over-year to $429.40 million. Its EPS for the same quarter is expected to increase 321.1% year-over-year to $0.08. It surpassed the consensus EPS estimates in each of the trailing four quarters.
TBLA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system.
TBLA has a B grade for Growth, Value, and Sentiment. It is ranked #2 in the same industry.
Click here for the additional POWR Ratings for TBLA (Stability, Quality, and Momentum).
Advantage Solutions vs. Taboola: Which AdTech Stock Is More Click-Worthy?
The transition from traditional media to digital platforms is a significant driver of the AdTech market. Advertisers are following suit as consumers increasingly favor online channels for information, entertainment, and shopping.
Furthermore, digital platforms offer more precise metrics and analytics, enabling advertisers to optimize their campaigns in real-time, leading to more effective marketing strategies. Both ADV and TBLA stand to capitalize on these burgeoning industry trends. However, TBLA’s higher profitability and strong analysts' sentiments favor it as the better AdTech stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Advertising industry here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
ADV shares were trading at $3.70 per share on Tuesday afternoon, down $0.07 (-1.86%). Year-to-date, ADV has gained 2.21%, versus a 18.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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