Critical Review: LegalZoom.com (NASDAQ:LZ) versus Lianhe Sowell International Group (NASDAQ:LHSW)

LegalZoom.com (NASDAQ:LZ) and Lianhe Sowell International Group (NASDAQ:LHSW) are both small-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.

Institutional & Insider Ownership

82.0% of LegalZoom.com shares are held by institutional investors. 5.9% of LegalZoom.com shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for LegalZoom.com and Lianhe Sowell International Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	1	6	2	0	2.11
Lianhe Sowell International Group	1	0	0	0	1.00

LegalZoom.com currently has a consensus price target of $10.83, suggesting a potential upside of 8.01%. Given LegalZoom.com’s stronger consensus rating and higher possible upside, research analysts clearly believe LegalZoom.com is more favorable than Lianhe Sowell International Group.

Profitability

This table compares LegalZoom.com and Lianhe Sowell International Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	4.07%	20.36%	6.05%
Lianhe Sowell International Group	N/A	N/A	N/A

Earnings and Valuation

This table compares LegalZoom.com and Lianhe Sowell International Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LegalZoom.com	$681.88 million	2.65	$29.96 million	$0.16	62.69
Lianhe Sowell International Group	N/A	N/A	N/A	N/A	N/A

LegalZoom.com has higher revenue and earnings than Lianhe Sowell International Group.

Summary

LegalZoom.com beats Lianhe Sowell International Group on 9 of the 9 factors compared between the two stocks.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.

About Lianhe Sowell International Group

Lianhe Sowell International Group Ltd. is a holding company, which engages in trading of electronic products and software development. Its products include Intelligent traffic, low voltage Intelligent Integration, Industrial Intelligence, Industrial machine vision, and precision visual Al painting robot. The company was founded by Yue Zhu on April 6, 2007 and is headquartered in Shenzhen, China.