Zhihu (NYSE:ZH – Get Free Report) and Alphabet (NASDAQ:GOOGL – Get Free Report) are both communication services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.
Risk and Volatility
Zhihu has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, Alphabet has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.
Valuation and Earnings
This table compares Zhihu and Alphabet”s gross 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.
Analyst Recommendations
This is a breakdown of current ratings for Zhihu and Alphabet, as reported by MarketBeat.
| 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 target price of $425.74, indicating 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.
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% |
Insider and Institutional Ownership
28.9% of Zhihu shares are owned by institutional investors. Comparatively, 40.0% of Alphabet shares are owned by institutional investors. 13.6% of Zhihu shares are owned by insiders. Comparatively, 11.6% of Alphabet shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
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.
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