Financial Review: American Well (NYSE:AMWL) and Advantage Solutions (NASDAQ:ADV)

Advantage Solutions (NASDAQ:ADV) and American Well (NYSE:AMWL) are both small-cap business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.

Volatility & Risk

Advantage Solutions has a beta of 1.57, suggesting that its stock price is 57% more volatile than the S&P 500. Comparatively, American Well has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Profitability

This table compares Advantage Solutions and American Well’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advantage Solutions	-1.35%	-4.51%	-1.31%
American Well	-137.32%	-46.76%	-37.98%

Insider and Institutional Ownership

49.8% of Advantage Solutions shares are held by institutional investors. Comparatively, 56.1% of American Well shares are held by institutional investors. 6.2% of Advantage Solutions shares are held by insiders. Comparatively, 12.9% of American Well shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Advantage Solutions and American Well’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advantage Solutions	$4.22 billion	0.32	-$63.26 million	($0.20)	-21.40
American Well	$259.05 million	0.62	-$675.16 million	($1.23)	-0.45

Advantage Solutions has higher revenue and earnings than American Well. Advantage Solutions is trading at a lower price-to-earnings ratio than American Well, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Advantage Solutions and American Well, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advantage Solutions	0	2	2	0	2.50
American Well	0	2	0	0	2.00

Advantage Solutions presently has a consensus target price of $3.43, suggesting a potential downside of 19.78%. American Well has a consensus target price of $1.00, suggesting a potential upside of 79.08%. Given American Well’s higher possible upside, analysts clearly believe American Well is more favorable than Advantage Solutions.

Summary

Advantage Solutions beats American Well on 9 of the 14 factors compared between the two stocks.

About Advantage Solutions

Advantage Solutions Inc. provides business solutions to consumer goods manufacturers and retailers in North America and internationally. It operates in two segments, Sales and Marketing. The Sales segment offers brand-centric services, such as headquarter relationship management; analytics, insights, and intelligence; and brand-centric merchandising services. This segment also provides retailer-centric services comprising retailer-centric merchandising and in-store media services. The Marketing segment offers brand-centric services, including shopper and consumer marketing, and brand experiential services; retailer-centric services, such as retail experiential and private label services; and digital marketing, and digital media and advertising services. The company was formerly known as Karman Holding Corp. and changed its name to Advantage Solutions Inc. in March 2016. The company was founded in 1987 and is headquartered in Irvine, California.

About American Well

American Well Corporation, an enterprise platform and software company, delivers digitally enabling hybrid care in the United States and internationally. The company offers Converge, a cloud-based platform that enables health providers, payers, and innovators to provide in-person, virtual and automated care; and delivers virtual primary care, post-discharge follow-up, chronic condition management, virtual nursing, e-sitting, on-demand and scheduled virtual visits, specialty consults, automated care, and behavioral health, as well as specialty care programs, including dermatology, musculoskeletal care, second opinion, and cardiometabolic care to patients and members. It provides Carepoint devices comprising carts, peripherals, tablets, and TVs, which serve as digital access points in clinical settings. In addition, the company offers Amwell Medical Group network services consisting of primary and urgent care, behavioral health therapy, acute psychiatry, lactation counseling, and nutrition services. Further, it provides professional services to facilitate implementation, workflow design, systems integration, and service expansion for its products, as well as patient and provider engagement services. The company sells its products through field sales professionals, channel partners, and value-added resellers. American Well Corporation was incorporated in 2006 and is headquartered in Boston, Massachusetts.