Reviewing Paltalk (NASDAQ:PALT) and Zhihu (NYSE:ZH)

Paltalk (NASDAQ:PALT) and Zhihu (NYSE:ZH) are both small-cap business services companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, valuation and profitability.

Earnings and Valuation

This table compares Paltalk and Zhihu’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paltalk	$10.98 million	2.59	-$1.07 million	($0.12)	-25.67
Zhihu	$591.40 million	0.71	-$229.25 million	($0.19)	-3.60

Paltalk has higher earnings, but lower revenue than Zhihu. Paltalk is trading at a lower price-to-earnings ratio than Zhihu, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Paltalk has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, Zhihu has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Paltalk and Zhihu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paltalk	0	0	1	0	3.00
Zhihu	0	0	0	0	N/A

Profitability

This table compares Paltalk and Zhihu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paltalk	-9.72%	-5.25%	-4.42%
Zhihu	-20.00%	-16.32%	-11.54%

Insider and Institutional Ownership

3.9% of Paltalk shares are held by institutional investors. Comparatively, 28.9% of Zhihu shares are held by institutional investors. 17.8% of Paltalk shares are held by insiders. Comparatively, 13.6% of Zhihu shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Paltalk beats Zhihu on 9 of the 12 factors compared between the two stocks.

About Paltalk

Paltalk, Inc., together with its subsidiaries, develops communications software and multimedia social applications worldwide. It offers consumer applications, which include Paltalk, Camfrog, and Tinychat for live video chat; and owns and operates Vumber, a telecommunications services provider that enables users to have multiple phone numbers in any area code through which calls can be forwarded to a user's existing cell phone or land line telephone number. The company provides ManyCam, a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing applications, and distance learning tools; and product payment options, where users can pay by credit card, PayPal, western union, check, local e-wallet providers, or complete an in-app purchase through the Apple App Store or Google Play Store for Android users. In addition, it offers technology services, such as development, integration, engineering, licensing, other services. The company was formerly known as PeerStream, Inc. and changed its name to Paltalk, Inc. in May 2020. Paltalk, Inc. was incorporated in 2005 and is based in Jericho, New York.

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 also offers technology, business support, and consulting services; information transmission, software, and information technology services; 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.