Contrasting Gaotu Techedu (NYSE:GOTU) and Scientific Learning (OTCMKTS:SCIL)

Gaotu Techedu (NYSE:GOTU) and Scientific Learning (OTCMKTS:SCIL) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, analyst recommendations and risk.

Earnings and Valuation

This table compares Gaotu Techedu and Scientific Learning”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gaotu Techedu	$5.10 billion	0.19	-$1.03 million	($0.49)	-7.73
Scientific Learning	N/A	N/A	N/A	N/A	N/A

Scientific Learning has lower revenue, but higher earnings than Gaotu Techedu.

Profitability

This table compares Gaotu Techedu and Scientific Learning’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gaotu Techedu	-26.36%	-37.79%	-19.01%
Scientific Learning	N/A	N/A	N/A

Insider and Institutional Ownership

48.4% of Gaotu Techedu shares are owned by institutional investors. 44.9% of Gaotu Techedu shares are owned by company insiders. Comparatively, 16.1% of Scientific Learning shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Gaotu Techedu and Scientific Learning, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gaotu Techedu	1	0	0	0	1.00
Scientific Learning	0	0	0	0	0.00

Gaotu Techedu presently has a consensus target price of $5.81, indicating a potential upside of 53.30%. Given Gaotu Techedu’s stronger consensus rating and higher possible upside, analysts clearly believe Gaotu Techedu is more favorable than Scientific Learning.

Summary

Gaotu Techedu beats Scientific Learning on 5 of the 8 factors compared between the two stocks.

About Gaotu Techedu

Gaotu Techedu Inc., a technology-driven education company, provides learning services, educational content, and digitalized learning products in the People's Republic of China. The company offers traditional online academic subject tutoring services that covers academic subjects, such as mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science for students; non-academic tutoring services; personal interest courses comprising chess learning, family relationships and education, humanities, and science courses; and professional courses primarily for college students and adults preparing for professional qualification exams, such as teacher's qualification, Chartered Financial Analyst designation, Certified Public Accountant designation, and other exams. It also offers admission courses for admission tests and interviews, including national-post graduate entrance examination, civil service examinations, and others; foreign language courses; overseas study related services; and courses to prepare and pass certain language exams for study abroad, such as IELTS and TOEFL. In addition, the company designs and develops course outlines, interactive courseware, practice exercises, and lesson notes; publishes reference books comprising Chinese dictionary, dictionary of idioms, and past exam questions for the college entrance examination; and develops, expands, and upgrades education-centric digital products and solutions, as well as learning apps. Further, it offers books and digitalized auxiliary learning tools, such as smart devices and translation pens; and online tutoring services. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, China.

About Scientific Learning

Scientific Learning Corporation, an education company, develops, distributes, and licenses technology that accelerates learning by enhancing the processing efficiency of the brain. Its flagship Fast ForWord, a Web-based product, comprises Fast ForWord Language for elementary learners and Fast ForWord Literacy for adolescent learners that build foundational reading and language skills to help districts move below grade level learners to learn in the general classroom, and Fast ForWord Reading, which builds learning capacity through developing cognitive skills using exercises focusing on phonemic awareness, phonics and decoding, spelling, vocabulary, fluency, and comprehension. The company also provides Reading Assistant that offers a one-on-one reading tutor for learners; ResultsNow!, an online hosting and support solution for its Fast ForWord and Reading Assistant products; and BrainPro services targeted at learners who are below grade level. In addition, it offers on-site product training, technical installation, implementation management, consulting, and Web-based synchronous and asynchronous professional development services; and software technical update releases, as well as extensive telephone, email, and chat support services. The company offers learning solutions primarily to educational institutions, speech and language clinics, learning centers, and parents. Scientific Learning Corporation was founded in 1995 and is headquartered in Oakland, California.