Sunlands Technology Group (NYSE:STG) & Sohu.com (NASDAQ:SOHU) Critical Survey

Sohu.com (NASDAQ:SOHU) and Sunlands Technology Group (NYSE:STG) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

Analyst Recommendations

This is a summary of recent ratings for Sohu.com and Sunlands Technology Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sohu.com	0	1	2	0	2.67
Sunlands Technology Group	1	0	0	0	1.00

Sohu.com currently has a consensus target price of $19.00, suggesting a potential upside of 46.95%. Given Sohu.com’s stronger consensus rating and higher probable upside, analysts clearly believe Sohu.com is more favorable than Sunlands Technology Group.

Valuation & Earnings

This table compares Sohu.com and Sunlands Technology Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sohu.com	$584.33 million	0.58	$394.10 million	$7.84	1.65
Sunlands Technology Group	$288.84 million	0.18	$52.28 million	$3.86	1.02

Sohu.com has higher revenue and earnings than Sunlands Technology Group. Sunlands Technology Group is trading at a lower price-to-earnings ratio than Sohu.com, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

33.0% of Sohu.com shares are owned by institutional investors. Comparatively, 26.4% of Sunlands Technology Group shares are owned by institutional investors. 21.1% of Sohu.com shares are owned by insiders. Comparatively, 59.7% of Sunlands Technology Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Sohu.com has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500. Comparatively, Sunlands Technology Group has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares Sohu.com and Sunlands Technology Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sohu.com	35.19%	20.92%	14.76%
Sunlands Technology Group	18.56%	39.98%	17.58%

Summary

Sohu.com beats Sunlands Technology Group on 10 of the 14 factors compared between the two stocks.

About Sohu.com

Sohu.com Limited engages in the provision of online media, video, and game products and services on personal computers (PCs) and mobile devices in China. It operates through two segments: Sohu and Changyou. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, as well as ifox, a video application for PC. It also operates Focus (www.focus.cn), which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. In addition, the company offers interactive online games for PCs and mobile devices. Further, it provides paid subscription and interactive broadcasting services. The company was incorporated in 1996 and is headquartered in Beijing, China.

About Sunlands Technology Group

Sunlands Technology Group, through its subsidiaries, provides online education services through online and mobile platforms in the People's Republic of China. It offers various degree- and diploma-oriented post-secondary courses, including preparation courses for the self-taught higher education examination (STE) for learners pursuing associate diplomas or bachelor's degrees, as well as for the entrance examinations of Master of Business Administration programs. The company's STE courses include Chinese language and literature, law, pre-school education, marketing, English, human resource management, business administration, business management, modern corporate governance, financial management, advertising, accounting, administrative management, computer information management, finance, chain operation management, and visual communication and design and production. It also provides professional certification preparation courses in various industries and professions, such as accounting, human resources, teaching, and finance. In addition, the company offers education services through online and mobile platforms to adult students, pursuing post-secondary, and professional educations. The company was formerly known as Sunlands Online Education Group and changed its name to Sunlands Technology Group in August 2018. Sunlands Technology Group was founded in 2003 and is headquartered in Beijing, the People's Republic of China.