Financial Review: Alphabet (NASDAQ:GOOGL) vs. Zhihu (NYSE:ZH)

Zhihu (NYSE:ZH) and Alphabet (NASDAQ:GOOGL) are both communication services companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Valuation and Earnings

This table compares Zhihu and Alphabet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zhihu	$393.10 million	0.77	-$27.58 million	($0.55)	-6.32
Alphabet	$402.84 billion	10.69	$132.17 billion	$19.91	17.69

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

Risk and Volatility

Zhihu has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500. Comparatively, Alphabet has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Zhihu	-11.33%	-7.71%	-5.75%
Alphabet	54.77%	51.32%	35.42%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Zhihu and Alphabet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zhihu	1	0	0	0	1.00
Alphabet	0	4	46	5	3.02

Alphabet has a consensus price target of $425.74, suggesting a potential upside of 20.87%. Given Alphabet’s stronger consensus rating and higher probable upside, analysts clearly believe Alphabet is more favorable than Zhihu.

Institutional & Insider Ownership

28.9% of Zhihu shares are held by institutional investors. Comparatively, 40.0% of Alphabet shares are held by institutional investors. 13.6% of Zhihu shares are held by insiders. Comparatively, 11.6% of Alphabet shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Alphabet beats Zhihu on 14 of the 15 factors compared between the two stocks.

About Zhihu

Zhihu Inc. operates an online content community in the People’s Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People’s Republic of China.

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.