Contrasting Sunlands Technology Group (NYSE:STG) & HealthStream (NASDAQ:HSTM)

HealthStream (NASDAQ:HSTM) and Sunlands Technology Group (NYSE:STG) are both small-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.

Dividends

HealthStream pays an annual dividend of $0.14 per share and has a dividend yield of 0.5%. Sunlands Technology Group pays an annual dividend of $0.63 per share and has a dividend yield of 17.3%. HealthStream pays out 20.9% of its earnings in the form of a dividend. Sunlands Technology Group pays out 16.3% 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. HealthStream has increased its dividend for 2 consecutive years. Sunlands Technology Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

69.6% of HealthStream shares are held by institutional investors. Comparatively, 26.4% of Sunlands Technology Group shares are held by institutional investors. 20.4% of HealthStream shares are held by company insiders. Comparatively, 59.7% of Sunlands Technology Group 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.

Valuation & Earnings

This table compares HealthStream and Sunlands Technology Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HealthStream	$304.06 million	2.68	$18.34 million	$0.67	41.60
Sunlands Technology Group	$1.97 billion	0.02	$52.28 million	$3.86	0.94

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

Volatility and Risk

HealthStream has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500. Comparatively, Sunlands Technology Group has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares HealthStream and Sunlands Technology Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HealthStream	6.39%	6.47%	4.44%
Sunlands Technology Group	18.56%	39.98%	17.58%

Analyst Recommendations

This is a breakdown of recent ratings for HealthStream and Sunlands Technology Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HealthStream	0	3	0	0	2.00
Sunlands Technology Group	1	0	0	0	1.00

HealthStream currently has a consensus target price of $27.00, indicating a potential downside of 3.12%. Given HealthStream’s stronger consensus rating and higher possible upside, equities analysts plainly believe HealthStream is more favorable than Sunlands Technology Group.

Summary

Sunlands Technology Group beats HealthStream on 10 of the 16 factors compared between the two stocks.

About HealthStream

HealthStream, Inc. provides Software-as-a-Service (SaaS) based applications for healthcare organizations in the United States. The company’s solutions help healthcare organizations in meeting their ongoing clinical development, talent management, training, education, assessment, competency management, safety and compliance, and scheduling, as well as provider credentialing, privileging, and enrollment needs. It offers hStream, a technology platform that powers a range of healthcare workforce solutions. The company provides its solutions to customers across a range of entities within the healthcare industry, including private, not-for-profit, and government entities, as well as pharmaceutical and medical device companies through its direct sales teams. The company was incorporated in 1990 and is headquartered in Nashville, Tennessee.

About Sunlands Technology Group

Sunlands Technology Group, through its subsidiaries, provides online education services through online and mobile platforms in the People's Republic of China. It offers various degree- and diploma-oriented post-secondary courses, including preparation courses for the self-taught higher education examination (STE) for learners pursuing associate diplomas or bachelor's degrees, as well as for the entrance examinations of Master of Business Administration programs. The company's STE courses include Chinese language and literature, law, pre-school education, marketing, English, human resource management, business administration, business management, modern corporate governance, financial management, advertising, accounting, administrative management, computer information management, finance, chain operation management, and visual communication and design and production. It also provides professional certification preparation courses in various industries and professions, such as accounting, human resources, teaching, and finance. In addition, the company offers education services through online and mobile platforms to adult students, pursuing post-secondary, and professional educations. The company was formerly known as Sunlands Online Education Group and changed its name to Sunlands Technology Group in August 2018. Sunlands Technology Group was founded in 2003 and is headquartered in Beijing, the People's Republic of China.