I am always interested in how much people will pay for particular stocks and why. Most important is the valuation, the total Market Cap of the company. To obtain the market cap you multiply the total shares by the share price. The public market may only have a percentage of the total shares so you need to know the entire number. Most all quote services will list the market cap of the company.
Here Are Two Market Cap Comparisons
Here are two companies I like to follow that are in the similar industries and considered competitors, at least by Yahoo Finance. They are both Nasdaq companies. The first of two is RetailMeNot.com which is listed as Nasdaq:SALE. The second company is GroupOn which is listed as Nasdaq:GRPN.
Take a look at the comparison below provided by Yahoo finance on November 6, 2013.
Both of these companies provide customer acquisition services and sales for retailers. They are essentially providing the same service but in a different way.
Compare the Numbers
In the chart above you can see that RetailMeNot has a market cap of $1.63 Billion and GroupOn has a market cap of $6.59 Billion. What is most interesting to me is why GroupOn has the larger market cap (significantly larger). Look at the RetailMeNot operations with 373 employees (which is much less than the 11,394 of GroupOn) and quarterly growth of .44 as opposed to .07 and an operating margin of .30 verse .03 of GroupOn.
While Groupon does have significantly more gross revenue at $2.42 Billion verse $168.91 Million, what matters is not total revenue but the margins and revenue. RetailMeNot has an EPS (earnings per share) of .55 while GroupOn is -.14. Most importantly RetailMeNot has a Net Income of $26.44 Million and GroupOn has a net revenue of -$95.63 Million.
If you look at the numbers below you see that RetailMeNot is growing faster, earns more per share, has lower operational costs, has higher margins and made a profit. All while GroupOn lost money.
I do not know why GroupOn has such a higher valuation than RetailMeNot. Sometimes I wonder if those investing in companies have done any due diligence at all.