Contrasting Actua (ACTA) & NetEase (NTES)

NetEase (NASDAQ: NTES) and Actua (NASDAQ:ACTA) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.

Analyst Recommendations

This is a breakdown of current ratings and target prices for NetEase and Actua, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	3	4	7	0	2.29
Actua	0	1	0	0	2.00

NetEase currently has a consensus target price of $325.92, indicating a potential downside of 2.68%. Actua has a consensus target price of $17.00, indicating a potential upside of 7.26%. Given Actua’s higher probable upside, analysts plainly believe Actua is more favorable than NetEase.

Dividends

NetEase pays an annual dividend of $3.63 per share and has a dividend yield of 1.1%. Actua does not pay a dividend. NetEase pays out 23.9% of its earnings in the form of a dividend.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NetEase	25.34%	31.84%	21.48%
Actua	N/A	-7.01%	-5.78%

Earnings and Valuation

This table compares NetEase and Actua’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetEase	$5.50 billion	8.05	$1.67 billion	$15.19	22.05
Actua	$109.30 million	4.74	$70.08 million	($0.31)	-51.13

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

Insider & Institutional Ownership

50.4% of NetEase shares are owned by institutional investors. Comparatively, 72.5% of Actua shares are owned by institutional investors. 54.7% of NetEase shares are owned by company insiders. Comparatively, 10.2% of Actua shares are owned 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.

Risk & Volatility

NetEase has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, Actua has a beta of 1.67, meaning that its stock price is 67% more volatile than the S&P 500.

Summary

NetEase beats Actua on 12 of the 16 factors compared between the two stocks.

NetEase Company Profile

NetEase, Inc. (NetEase) is a technology company. The Company operates an interactive online community in China and is a provider of Chinese language content and services through its online games, Internet media, e-mail, e-commerce and other businesses. The Company operates through three segments: Online Game Services; Advertising Services, and E-mail, E-commerce and Others. Its online games business primarily focuses on offering personal computer (PC)-client massively multi-player online role-playing games (PC-client MMORPGs), as well as mobile games to the Chinese market. The NetEase Websites provide Internet users with Chinese language online services centered over three core service categories, which include content, community and communication. Its online advertising offerings include banner advertising, direct e-mail, sponsored special events, games, contests and other activities. It offers free and fee-based premium e-mail services to its individual users and corporate users.

Actua Company Profile

Actua Corporation, formerly ICG Group, Inc., is a multi-vertical cloud technology company. The Company operates through two segments, which include the vertical cloud segment and the vertical cloud (venture) segment. The Company’s vertical cloud-based businesses include Bolt Solutions Inc. (Bolt), GovDelivery Holdings, Inc. (GovDelivery) and VelocityEHS Holdings, Inc. (VelocityEHS), which operate in the commercial and personal property and casualty insurance, wealth management, government communications and environmental, health and safety (EH&S) markets, respectively. The vertical cloud (venture) businesses include InstaMed Holdings, Inc. (InstaMed) and Parchment Inc. (Parchment), which operate a cloud-based healthcare payments network and an education credentials technology, respectively.

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