Duolingo (NASDAQ:DUOL – Get Free Report) and Frontdoor (NASDAQ:FTDR – Get Free Report) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.
Institutional and Insider Ownership
91.6% of Duolingo shares are owned by institutional investors. 16.6% of Duolingo shares are owned by company insiders. Comparatively, 1.6% of Frontdoor shares are owned 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.
Risk and Volatility
Duolingo has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, Frontdoor has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Duolingo | $1.04 billion | 7.03 | $414.07 million | $8.44 | 18.47 |
| Frontdoor | $2.09 billion | 2.71 | $255.00 million | $3.77 | 21.86 |
Duolingo has higher earnings, but lower revenue than Frontdoor. Duolingo is trading at a lower price-to-earnings ratio than Frontdoor, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent recommendations for Duolingo and Frontdoor, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Duolingo | 1 | 15 | 8 | 1 | 2.36 |
| Frontdoor | 0 | 3 | 5 | 0 | 2.62 |
Duolingo currently has a consensus target price of $133.53, indicating a potential downside of 14.32%. Frontdoor has a consensus target price of $92.60, indicating a potential upside of 12.37%. Given Frontdoor’s stronger consensus rating and higher possible upside, analysts clearly believe Frontdoor is more favorable than Duolingo.
Profitability
This table compares Duolingo and Frontdoor’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Duolingo | 35.88% | 12.10% | 8.24% |
| Frontdoor | 12.72% | 120.90% | 14.86% |
Summary
Duolingo beats Frontdoor on 8 of the 15 factors compared between the two stocks.
About Duolingo
Duolingo, Inc. operates as a mobile learning platform in the United States, the United Kingdom, and internationally. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. It also provides a digital English language proficiency assessment exam. Duolingo, Inc. was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.
About Frontdoor
Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company’s home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems. The company serves homeowners under the Frontdoor, American Home Shield, HSA, OneGuard, Landmark Home Warranty, Frontdoor logo, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.
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