Critical Survey: NetEase (NTES) versus TechTarget (TTGT)

NetEase (NASDAQ: TTGT) and TechTarget (NASDAQ:TTGT) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings for NetEase and TechTarget, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NetEase 1 4 10 0 2.60
TechTarget 0 2 2 0 2.50

NetEase currently has a consensus price target of $321.25, indicating a potential upside of 62.49%. TechTarget has a consensus price target of $23.25, indicating a potential downside of 3.08%. Given NetEase’s stronger consensus rating and higher probable upside, equities research analysts plainly believe NetEase is more favorable than TechTarget.

Risk & Volatility

NetEase has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, TechTarget has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Valuation & Earnings

This table compares NetEase and TechTarget’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NetEase $8.32 billion 3.12 $1.65 billion $12.41 15.93
TechTarget $108.56 million 6.09 $6.80 million $0.24 99.96

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

Dividends

NetEase pays an annual dividend of $2.43 per share and has a dividend yield of 1.2%. TechTarget does not pay a dividend. NetEase pays out 19.6% of its earnings in the form of a dividend. NetEase has increased its dividend for 2 consecutive years.

Profitability

This table compares NetEase and TechTarget’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NetEase 11.49% 14.57% 9.22%
TechTarget 10.24% 9.77% 7.00%

Insider & Institutional Ownership

45.8% of NetEase shares are owned by institutional investors. Comparatively, 59.1% of TechTarget shares are owned by institutional investors. 54.7% of NetEase shares are owned by insiders. Comparatively, 27.1% of TechTarget shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

NetEase beats TechTarget on 12 of the 17 factors compared between the two stocks.

NetEase Company Profile

NetEase, Inc. operates an interactive online community in the People's Republic of China. The company operates through Online Game Services; E-Commerce; Advertising Services; and Email and Others segments. It offers various games in a range of genres through mobile devices and PCs, including role playing games, MMORPGs, battle arena games, simulation games, collectible card games, first-person shooter games, sandbox games, and other types of games to the Chinese market. The company also operates Kaola that sells imported maternity and baby products, skincare and cosmetics, and other general merchandise; and Yanxuan, which sells its private label products, including apparel, homeware, kitchenware, and other general merchandise, as well as NetEase News App and NetEase Websites, which provide Internet users with Chinese language-based online services that are centered around content and interactive community. In addition, it provides online advertising services comprising banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities; and email services to individual and corporate users. Further, NetEase, Inc. offers online services, such as CC, a live video streaming platform; Cloud Music, a music streaming platform; Wangyibao, a payment platform; EaseRead, an e-reading platform; NetEase Cloud Classroom, an online education platform; and Youdao Dictionary, an e-dictionary services platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is based in Beijing, the People's Republic of China.

TechTarget Company Profile

TechTarget, Inc. provides specialized online content for buyers of enterprise information technology (IT) products and services in the United States, the United Kingdom, and internationally. It also provides purchase-intent marketing and sales services for enterprise technology vendors; and customized marketing programs that integrate demand generation and brand marketing, as well as advertising techniques, which enable IT vendors to identify, reach, and influence corporate IT decision makers who are researching specific IT purchases. The company offers online services, including IT Deal Alert, core online, demand solutions, brand solutions, and custom content creation. It also operates an integrated content platform that consists of a network of approximately 140 Websites that focus on a specific IT sector, such as storage, security, networking, or business applications. In addition, the company enables registered members to conduct their pre-purchase research by accessing vendor supplied content through a network of Websites. TechTarget, Inc. was founded in 1999 and is headquartered in Newton, Massachusetts.

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