Critical Analysis: Perion Network (NASDAQ:PERI) and GRAVITY (NASDAQ:GRVY)

Perion Network (NASDAQ:PERI) and GRAVITY (NASDAQ:GRVY) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, profitability, valuation, dividends and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Perion Network and GRAVITY, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Perion Network	1	1	3	0	2.40
GRAVITY	0	1	0	0	2.00

Perion Network currently has a consensus target price of $14.50, indicating a potential upside of 67.82%. Given Perion Network’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Perion Network is more favorable than GRAVITY.

Profitability

This table compares Perion Network and GRAVITY’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Perion Network	-2.53%	2.28%	1.77%
GRAVITY	16.84%	16.39%	13.70%

Volatility & Risk

Perion Network has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500. Comparatively, GRAVITY has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Insider and Institutional Ownership

68.1% of Perion Network shares are held by institutional investors. Comparatively, 9.9% of GRAVITY shares are held by institutional investors. 2.8% of Perion Network shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Perion Network and GRAVITY”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Perion Network	$432.36 million	0.82	$12.61 million	($0.26)	-33.23
GRAVITY	$576.82 billion	0.00	$59.44 million	$7.93	8.97

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

About Perion Network

Perion Network Ltd. provides digital advertising solutions to brands, agencies, and publishers in North America, Europe, and internationally. It offers Wildfire, a content monetization platform; search monetization solutions, including website monetization, search mediation, and app monetization; and cross-channel digital advertising software as a service platform. The company also provides supply management platform; demand management platform for campaign planning and design; analytics platform, which provides information and performance insights; creative platform, a robust media platform; and an AI platform that uses machine learning to bring intelligence to the various phases of campaigns. In addition, it offers an actionable performance monitoring platform to support the various phases of campaign management; an online video player and integrated ad server to upload, manage, and stream video content; content monetization system, which integrates ads within the content layouts at the page level. Further, the company provides a publisher management system that provides analytics and performance optimization tools, as well as reports; search-demand management systems; monetization products that integrate and onboards demand vendors; and AI Systems. Additionally, it offers Intelligent HUB (iHUB), which connects the supply and demand sides of the marketplace; and strategic optimization of relevant traits (SORT), a provisional patent technology that eliminates the need for cookies. The company was formerly known as IncrediMail Ltd. and changed its name to Perion Network Ltd. in November 2011. Perion Network Ltd. was incorporated in 1999 and is headquartered in Holon, Israel.

About GRAVITY

Gravity Co., Ltd. develops and publishes online and mobile games worldwide. It offers a massively multiplayer online role-playing game, including Ragnarok Online, Dragonica, Ragnarok Online II, and Ragnarok Landverse. Its mobile games portfolio includes Ragnarok M; Eternal Love; Ragnarok Origin; Ragnarok X: Next Generation; Ragnarok Arena; WITH ISLAND; the Labyrinth of Ragnarok; Ragnarok Poring Merge; Tera Classic; Ragnarok: The Lost Memories; Sadako M; NBA: Rise To Stardom; Milkmaid Of The Milky Way; Generation Zombie; Ragnarok Idle Adventure; Ragnarok 20 Heroes; White Chord; WITH: Whale In The High; Ragnarok Lost Memories; and Paladog Tactics. It also provides console games, such as Ragnarok DS for Nintendo DS; Ragnarok: The Princess of Light and Darkness for PlayStation Portable; Ragnarok Odyssey for PlayStation Vita; Double Dragon II for Xbox 360; Ragnarok Odyssey Ace for PlayStation Vita and PlayStation 3; Pigromance for Steam, Stove, Nintendo Switch, Xbox One, Xbox Series X|S; ALTF4 11 for Steam and Stove; Wetory for Steam, Stove, Nintedo Switch; and GRANDIA HD Collection for Nintendo Switch. In addition, it offers games for IPTV, including Haunted House and Pororo: The Little Penguin, and Kongsuni; and markets dolls, stationery, food, and other character based merchandises, as well as game manuals, monthly magazines, and other publications; PC games, including Puzzle Platformer, ALTF42, Ragnarok ZERO, KAMiBAKO-Mythology of Cube, Psychodemic, and FINAL KNIGHT; social network games and mobile games, such as Ragnarok V: Returns, Ragnarok: The Lost Memories and Ragnrok Begins in-house; and web-browser-based games, such as Ragnarok Prequel and Ragnarok Prequel II. Further, the company provides system development and maintenance services, as well as system integration services to third parties. The company was incorporated in 2000 and is headquartered in Seoul, South Korea. Gravity Co., Ltd. is a subsidiary of GungHo Online Entertainment, Inc.