Head to Head Review: Netflix (NASDAQ:NFLX) versus Yirendai (YRD)

Yirendai (NYSE: YRD) and Netflix (NASDAQ:NFLX) are both mid-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their profitabiliy, analyst recommendations, dividends, institutional ownership, earnings, risk and valuation.

Institutional & Insider Ownership

7.3% of Yirendai shares are held by institutional investors. Comparatively, 82.8% of Netflix shares are held by institutional investors. 42.2% of Yirendai shares are held by company insiders. Comparatively, 4.9% of Netflix shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Yirendai and Netflix’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Yirendai $547.82 million 3.83 $189.72 million $3.27 10.74
Netflix $10.19 billion 7.80 $706.92 million $0.82 224.44

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

Volatility and Risk

Yirendai has a beta of 8.28, meaning that its share price is 728% more volatile than the S&P 500. Comparatively, Netflix has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Yirendai and Netflix, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yirendai 1 0 1 0 2.00
Netflix 2 13 27 0 2.60

Yirendai currently has a consensus target price of $24.50, indicating a potential downside of 30.24%. Netflix has a consensus target price of $174.27, indicating a potential downside of 5.31%. Given Netflix’s stronger consensus rating and higher possible upside, analysts clearly believe Netflix is more favorable than Yirendai.

Profitability

This table compares Yirendai and Netflix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yirendai 36.09% 101.18% 44.89%
Netflix 3.55% 12.82% 2.55%

Summary

Netflix beats Yirendai on 8 of the 14 factors compared between the two stocks.

Yirendai Company Profile

Yirendai Ltd. is engaged in online consumer finance marketplace business in China. The Company conducts its business in China, through Yi Ren Heng Ye Technology Development (Beijing) Co., Ltd. (Heng Ye) and its consolidated variable interest entity, Heng Cheng Technology Development (Beijing) Co., Ltd. (Heng Cheng). Heng Cheng operates its Website, www.yirendai.com, and has an Internet content provider (ICP) license as an Internet information provider. Its online marketplace facilitates standard loan products, express loan products and vertical loan products to borrowers. Uses for these loan products include home remodels, durable good purchases, travel and continuing education. Its online marketplace provides investors with various investing tools, such as automated investing tool and self-directed investing tool. It maintains a secondary loan market on its marketplace where investors can transfer the loans they hold prior to maturity at the fair value of the remaining loans.

Netflix Company Profile

Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.

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