Critical Analysis: Freedom (NASDAQ:FRHC) & Canaan (NASDAQ:CAN)

Canaan (NASDAQ:CAN) and Freedom (NASDAQ:FRHC) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, dividends and risk.

Risk and Volatility

Canaan has a beta of 2.46, indicating that its stock price is 146% more volatile than the S&P 500. Comparatively, Freedom has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Canaan and Freedom, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canaan	1	2	6	0	2.56
Freedom	1	0	0	0	1.00

Canaan currently has a consensus price target of $2.17, indicating a potential upside of 279.45%. Freedom has a consensus price target of $138.00, indicating a potential downside of 14.65%. Given Canaan’s stronger consensus rating and higher probable upside, research analysts clearly believe Canaan is more favorable than Freedom.

Earnings & Valuation

This table compares Canaan and Freedom”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canaan	$529.73 million	0.40	-$210.27 million	($0.48)	-1.19
Freedom	$2.05 billion	4.82	$84.65 million	$0.02	8,084.50

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

Insider & Institutional Ownership

70.1% of Canaan shares are held by institutional investors. Comparatively, 1.3% of Freedom shares are held by institutional investors. 0.3% of Canaan shares are held by company insiders. Comparatively, 70.0% of Freedom shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Canaan and Freedom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canaan	-39.69%	-60.70%	-34.60%
Freedom	0.13%	0.21%	0.03%

Summary

Freedom beats Canaan on 9 of the 14 factors compared between the two stocks.

About Canaan

Canaan Inc. engages in the research, design, and sale of integrated circuit (IC) final mining equipment products by integrating IC products for bitcoin mining and related components in the People's Republic of China. It is also involved in the assembly and distribution of mining equipment and spare parts. The company has operations in the United States, Australia, Kazakhstan, Hong Kong, Canada, Mainland China, Thailand, Sweden, and internationally. Canaan Inc. was founded in 2013 and is based in Singapore.

About Freedom

Freedom Holding Corp., through its subsidiaries, provides securities brokerage, securities dealing, market making, investment research, investment counseling, and investment banking services. It offers retail brokerage services for exchange-traded and over-the-counter corporate equity and debt securities, money market instruments, exchange traded options and futures contracts, government bonds, and mutual funds; securities trading; underwriting services; margin lending services collateralized by securities and cash in the customer’s account; various investment education and training courses; investment research services; and commercial banking services, including payment cards, digital mortgages, and digital business and digital auto loans, as well as Freedom Box, a package of payment acquiring services. The company also provides capital raising solutions for corporate clients through initial public offerings and follow-on offerings; and debt capital markets solutions that focuses on structuring and distributing private and public debt for various purposes, including buyouts, acquisitions, growth capital financings, and recapitalizations, as well as information processing services. In addition, it facilitates repurchase and reverse repurchase agreements in proprietary trading activities; and covers short positions and settle other securities obligations to accommodate customers’ needs and finance its inventory positions. Further, the company offers proprietary trading and investment services, as well as insurance products; and Tradernet software platform for client margin risk evaluation and middle office security transfer requests. It operates in Central Asia, Eastern Europe, rest of Europe, the United States, Russia, the Middle East, and Caucasus. The company was formerly known as BMB Munai, Inc. and changed its name to Freedom Holding Corp. Freedom Holding Corp. was incorporated in 1981 and is headquartered in Almaty, Kazakhstan.