GigaMedia (NASDAQ:GIGM – Get Free Report) and NetEase (NASDAQ:NTES – Get Free Report) are both communication services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.
Volatility and Risk
GigaMedia has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500. Comparatively, NetEase has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.
Profitability
This table compares GigaMedia and NetEase’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| GigaMedia | -43.36% | -5.36% | -5.02% |
| NetEase | 27.86% | 19.50% | 14.45% |
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| GigaMedia | $3.47 million | 4.49 | -$1.55 million | ($0.18) | -7.83 |
| NetEase | $16.11 billion | 4.77 | $4.83 billion | $7.26 | 16.54 |
NetEase has higher revenue and earnings than GigaMedia. GigaMedia is trading at a lower price-to-earnings ratio than NetEase, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
13.5% of GigaMedia shares are held by institutional investors. Comparatively, 11.1% of NetEase shares are held by institutional investors. 1.0% of GigaMedia shares are held by company insiders. Comparatively, 54.7% of NetEase shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of recent ratings and price targets for GigaMedia and NetEase, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| GigaMedia | 1 | 0 | 0 | 0 | 1.00 |
| NetEase | 0 | 3 | 8 | 0 | 2.73 |
NetEase has a consensus target price of $159.25, suggesting a potential upside of 32.63%. Given NetEase’s stronger consensus rating and higher probable upside, analysts clearly believe NetEase is more favorable than GigaMedia.
Summary
NetEase beats GigaMedia on 13 of the 14 factors compared between the two stocks.
About GigaMedia
GigaMedia Limited, together with its subsidiaries, provides digital entertainment services in Taiwan, Hong Kong, and Macau. The company owns and operates FunTown, a digital entertainment portal that offers mobile and browser-based casual games, as well as provides services such as player clubs, tournaments, avatars, friends and family messenger and online chatting systems, customer service, mobile platform, and customer platform. It also offers MahJong, a traditional Chinese tile-based game; casual card and table games; online card games; and chance-based games, including bingo, lotto, horse racing, Sic-Bo, slots, and other casual games. In addition, the company provides role-playing and sports games, such as Tales Runner, a multi-player online obstacle running game; Yume 100, a story-based game that targets female players; Akaseka, a female-oriented game; and Shinobi Master New Link, a male-oriented game. GigaMedia Limited was founded in 1998 and is headquartered in Taipei, Taiwan.
About NetEase
NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally . The company operates through Games and Related Value-Added Services, Youdao, Cloud Music, and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, Youdao Listening Pod, Youdao Smart Light, Youdao Pocket Translator, and Youdao Super Dictionary; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services also include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.
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