MAX

We rate MediaAlpha, Inc. (MAX) as a Hold with a composite score of 51.5/100 at a current price of $8.97. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (79th percentile) and quality (61th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (25th percentile) and momentum (44th percentile) tempers our overall conviction. We assign a Narrow Moat rating (41/100), Low uncertainty, and Poor capital allocation.

Key items to watch: sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

MediaAlpha, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 51.5/100 places it at rank #1786 in our full 7,333-stock universe. At $773M in market capitalization, MediaAlpha, Inc. is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 72%, though momentum at the 44th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 15% (-44.6pp vs sector) narrow to operating margins of 1% (-2.4pp vs sector) and net margins of 0.1%, yielding a gross-to-net conversion rate of 1%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $8.97, MediaAlpha, Inc. appears undervalued relative to its fundamentals. Our value factor score of 79/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 95.6x (a 303% premium to the sector median of 23.7x), EV/EBITDA of 39.0x (at a premium), P/S of 0.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to MediaAlpha, Inc.. The company exhibits strong financial stability with a beta of 1.07, and a stability factor in the 54th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: elevated valuation multiple (P/E 95.6x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 54th percentile and quality factor at the 61th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our low uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate MediaAlpha, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-111.7%), weak asset returns (ROA 1.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — MediaAlpha, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, MediaAlpha, Inc. receives a Hold rating with a composite score of 51.5/100 (rank #1786 of 7,333). Our quantitative framework assigns a Narrow Moat (41/100, trend: stable), Low uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis supports a neutral stance on MediaAlpha, Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.