NetEase (NASDAQ:NTES – Get Free Report) and Sound Group (NASDAQ:SOGP – 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 analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.
Insider and Institutional Ownership
11.1% of NetEase shares are owned by institutional investors. Comparatively, 1.6% of Sound Group shares are owned by institutional investors. 54.7% of NetEase shares are owned by company insiders. Comparatively, 25.2% of Sound Group 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.
Profitability
This table compares NetEase and Sound Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NetEase | 27.86% | 19.50% | 14.45% |
| Sound Group | N/A | N/A | N/A |
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NetEase | $16.11 billion | 4.66 | $4.83 billion | $7.26 | 16.14 |
| Sound Group | $443.69 million | 0.08 | $32.39 million | ($1.21) | -8.89 |
NetEase has higher revenue and earnings than Sound Group. Sound Group is trading at a lower price-to-earnings ratio than NetEase, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current recommendations for NetEase and Sound Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NetEase | 0 | 3 | 7 | 0 | 2.70 |
| Sound Group | 0 | 1 | 0 | 0 | 2.00 |
NetEase currently has a consensus target price of $163.62, suggesting a potential upside of 39.60%. Given NetEase’s stronger consensus rating and higher possible upside, equities analysts plainly believe NetEase is more favorable than Sound Group.
Risk and Volatility
NetEase has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Sound Group has a beta of 2.44, indicating that its stock price is 144% more volatile than the S&P 500.
Summary
NetEase beats Sound Group on 13 of the 14 factors compared between the two stocks.
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.
About Sound Group
Sound Group Inc. operates as an audio-centric social and entertainment company. It focuses on building audio platform to connect and communicate. The company, through its product portfolio and in-house technologies, caters to user interest in audio entertainment and social networking. The company was formerly known as LIZHI INC. and changed its name to Sound Group Inc. in January 2024. Sound Group Inc. was founded in 2010 and is based in Singapore.
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