Comparing Marcus & Millichap (NYSE:MMI) and Compass (NYSE:COMP)

Compass (NYSE:COMP) and Marcus & Millichap (NYSE:MMI) are both real estate companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Risk and Volatility

Compass has a beta of 2.32, indicating that its stock price is 132% more volatile than the S&P 500. Comparatively, Marcus & Millichap has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500.

Profitability

This table compares Compass and Marcus & Millichap’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Compass	0.63%	3.62%	1.37%
Marcus & Millichap	1.77%	2.97%	2.21%

Institutional and Insider Ownership

67.0% of Compass shares are owned by institutional investors. Comparatively, 62.8% of Marcus & Millichap shares are owned by institutional investors. 2.9% of Compass shares are owned by insiders. Comparatively, 39.9% of Marcus & Millichap shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Compass and Marcus & Millichap, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass	0	6	8	1	2.67
Marcus & Millichap	1	1	0	0	1.50

Compass presently has a consensus price target of $14.15, suggesting a potential upside of 52.31%. Marcus & Millichap has a consensus price target of $28.00, suggesting a potential downside of 1.91%. Given Compass’ stronger consensus rating and higher possible upside, research analysts plainly believe Compass is more favorable than Marcus & Millichap.

Earnings and Valuation

This table compares Compass and Marcus & Millichap”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass	$6.96 billion	1.01	-$58.50 million	$0.06	154.88
Marcus & Millichap	$755.16 million	1.43	-$1.91 million	$0.37	77.15

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

Summary

Compass beats Marcus & Millichap on 9 of the 15 factors compared between the two stocks.

About Compass

Compass, Inc. provides real estate brokerage services in the United States. It operates a cloud-based platform that provides an integrated suite of software for customer relationship management, marketing, client service, operations, and other functionality in the real estate industry. The company offers mobile apps that allow agents to manage their business anytime and anywhere, as well as designs consumer-grade user interfaces, automated and simplified workflows for agent-client interactions, and insight-rich dashboards and reports. It also provides full-service title and escrow/settlement services to real estate agents' clients, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans; and Compass Concierge, a program in which home sellers access to capital to front the cost of home improvement services. The company was formerly known as Urban Compass, Inc. and changed its name to Compass, Inc. in January 2021.Compass, Inc. was incorporated in 2012 and is headquartered in New York, New York.

About Marcus & Millichap

Marcus & Millichap, Inc. engages in the provision of investment real estate brokerage services. It specializes in commercial real estate investment sales, property financing, research, and advisory services. The company was founded by George M. Marcus and William A. Millichap in 1971 and is headquartered in Calabasas, CA.