Reviewing Zhihu (NYSE:ZH) & WEBTOON Entertainment (NASDAQ:WBTN)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
WEBTOON Entertainment	-25.09%	2.10%	1.60%
Zhihu	-11.33%	-7.71%	-5.75%

Risk and Volatility

WEBTOON Entertainment has a beta of 2.62, indicating that its share price is 162% more volatile than the S&P 500. Comparatively, Zhihu has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500.

Insider and Institutional Ownership

28.9% of Zhihu shares are owned by institutional investors. 5.6% of WEBTOON Entertainment shares are owned by insiders. Comparatively, 13.6% of Zhihu shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares WEBTOON Entertainment and Zhihu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WEBTOON Entertainment	$1.37 billion	1.03	-$345.93 million	($2.63)	-3.96
Zhihu	$2.64 billion	0.10	-$27.58 million	($0.55)	-5.81

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for WEBTOON Entertainment and Zhihu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WEBTOON Entertainment	1	5	1	0	2.00
Zhihu	1	0	0	0	1.00

WEBTOON Entertainment presently has a consensus price target of $10.88, suggesting a potential upside of 4.32%. Given WEBTOON Entertainment’s stronger consensus rating and higher possible upside, analysts plainly believe WEBTOON Entertainment is more favorable than Zhihu.

Summary

WEBTOON Entertainment beats Zhihu on 8 of the 14 factors compared between the two stocks.

About WEBTOON Entertainment

WEBTOON Entertainment Inc. operates a storytelling platform worldwide. The company’s platform allows a community of creators and users to discover, create, and share new content. Its platform offers stories primarily in two ways, including web-comics, a graphical comic-like medium; and web-novels, which are text-based stories. The company was founded in 2014 and is headquartered in Los Angeles, California. WEBTOON Entertainment Inc. is a subsidiary of NAVER Corporation.

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.