Critical Survey: iQIYI (NASDAQ:IQ) and Alphabet (NASDAQ:GOOG)

Alphabet (NASDAQ:GOOG) and iQIYI (NASDAQ:IQ) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for Alphabet and iQIYI, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alphabet	0	4	27	5	3.03
iQIYI	2	1	2	0	2.00

Alphabet currently has a consensus target price of $378.53, indicating a potential upside of 5.91%. iQIYI has a consensus target price of $2.55, indicating a potential upside of 120.49%. Given iQIYI’s higher possible upside, analysts plainly believe iQIYI is more favorable than Alphabet.

Profitability

This table compares Alphabet and iQIYI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alphabet	37.92%	38.99%	27.41%
iQIYI	-2.61%	-4.72%	-1.36%

Risk and Volatility

Alphabet has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, iQIYI has a beta of 0.19, meaning that its stock price is 81% less volatile than the S&P 500.

Earnings and Valuation

This table compares Alphabet and iQIYI”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alphabet	$402.84 billion	10.75	$132.17 billion	$13.11	27.26
iQIYI	$3.80 billion	0.29	-$29.50 million	($0.10)	-11.55

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

Institutional & Insider Ownership

27.3% of Alphabet shares are held by institutional investors. Comparatively, 52.7% of iQIYI shares are held by institutional investors. 13.0% of Alphabet shares are held by company insiders. Comparatively, 57.8% of iQIYI shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Alphabet beats iQIYI on 12 of the 15 factors compared between the two stocks.

About Alphabet

Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.

About iQIYI

iQIYI, Inc., together with its subsidiaries, provides online entertainment video services in the People's Republic of China. It offers various products and services, including online video, online games, online literature, animations, and other products. The company operates a platform that provides a collection of internet video content, such as professionally produced content licensed from professional content providers and self-produced content. It also offers membership, online advertising, content distribution, and live broadcasting services. In addition, the company operates iQIYI Show, a live broadcasting platform that enables users to follow their favorite hosts and shows in real time through live broadcasting; and iQIYI Lite that offers an easy and quick access to the personalized videos based on their user preferences. Further, it is involved in the talent agency and IP licensing activities, as well as engages in developing a video community app. The company was formerly known as Qiyi.com, Inc. and changed its name to iQIYI, Inc. in November 2017. iQIYI, Inc. was incorporated in 2009 and is headquartered in Beijing, China. iQIYI, Inc. is a subsidiary of Baidu, Inc.