AdTheorent Holdings (ADTH) is a digital media platform that utilizes machine learning and advanced data analytics to make advertising more effective and efficient, notes Faris Sleem, small cap specialist and editor of The Bowser Report.

The company's platform operates without relying on individualized profiles or sensitive personal data for targeting. Its superior campaign performance have helped fuel customer adoption and year-over-year (yoy) growth. ADTH serves several industries and went public through a special purpose acquisition company (SPAC) in December 2021.

The company was founded in 2012 and was awarded “Best AI-Based Advertising Solution” and “Most Innovative Product” for four consecutive years. The platform is widely accepted, and the company has had tremendous success in consistently acquiring new customers, including 37 new healthcare and pharmaceutical advertiser brands in the first half of the year.

Trailing twelve-month net income and revenue indicate continued growth in 2022. As long as the company maintains its customer base, top line growth will maintain its trend. Although expenses were higher and EBITDA dipped in the most recent quarter, full year EBITDA is expected to be between $17.5-$27.5 million.

The strongest case for AdTheorent's undervaluation is its price/book (P/B) ratio of 1.65. A P/B ratio above 1 typically indicates the stock is overvalued. However, the industry average is 3.48. Additionally, ADTH's P/E ratio of 6 is well below the industry average of 10. Using these metrics, ADTH is trading at a 40% discount compared to its peers.

Institutional investors have clearly taken a liking to AdTheorent, as they currently account for 77% of the shares outstanding. H.I.G. Growth Partners is the majority equity holder with a whopping 39% of the shares outstanding. Palantir Technologies (PLTR) owns 1.5 million shares and is one of the top providers of data analytics in the industry.

AdTheorent has the technology and top line growth to capture market share in the advertising space. Acquiring new customers and investing in a diverse portfolio of customer verticals has set the company up for long-term success. If revenue growth maintains and institutions continue to accumulate shares, ADTH has a bright future ahead.

Subscribe to The Bowser Report here…