NetEase (NASDAQ:NTES) versus HUYA (NYSE:HUYA) Head to Head Contrast

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

Profitability

This table compares NetEase and HUYA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetEase	27.86%	19.50%	14.45%
HUYA	-1.59%	0.20%	0.14%

Dividends

NetEase pays an annual dividend of $1.91 per share and has a dividend yield of 1.6%. HUYA pays an annual dividend of $0.12 per share and has a dividend yield of 5.3%. NetEase pays out 26.3% of its earnings in the form of a dividend. HUYA pays out -200.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. HUYA is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings for NetEase and HUYA, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	1	2	6	0	2.56
HUYA	1	1	1	0	2.00

NetEase currently has a consensus price target of $159.86, indicating a potential upside of 30.36%. HUYA has a consensus price target of $3.40, indicating a potential upside of 51.45%. Given HUYA’s higher possible upside, analysts clearly believe HUYA is more favorable than NetEase.

Institutional and Insider Ownership

11.1% of NetEase shares are held by institutional investors. Comparatively, 23.2% of HUYA shares are held by institutional investors. 54.7% of NetEase shares are held by company insiders. Comparatively, 1.2% of HUYA shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

NetEase has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, HUYA has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Earnings and Valuation

This table compares NetEase and HUYA”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetEase	$16.11 billion	4.88	$4.83 billion	$7.26	16.89
HUYA	$929.83 million	0.55	-$16.10 million	($0.06)	-37.42

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

Summary

NetEase beats HUYA on 11 of the 16 factors compared between the two stocks.

About NetEase

NetEase, Inc. is a China-based internet technology company best known for developing and publishing online games. Its portfolio includes titles such as Fantasy Westward Journey and Identity V, as well as games for mobile and other platforms. The company serves players in China and international markets. NetEase also operates NetEase Cloud Music, a music streaming and social platform, and Youdao, which provides digital learning services and education technology products. Its businesses span game development and publishing, music, and online learning.

About HUYA

HUYA Inc. operates online game livestreaming and interactive entertainment platforms. Its services connect viewers with game streamers and esports events, and include live video, chat and other interactive features, as well as advertising and related services for game publishers and content creators. The company’s flagship platform, Huya Live, serves users in China. HUYA has also used Nimo TV to reach audiences in international markets. The business grew out of the game livestreaming operations of YY, a Chinese social media company, and HUYA became a publicly listed company in 2018.