Head to Head Comparison: Youdao (DAO) versus The Competition

Youdao (NYSE:DAO) is one of 166 public companies in the “Diversified Consumer Services” industry, but how does it compare to its competitors? We will compare Youdao to related businesses based on the strength of its earnings, profitability, institutional ownership, risk, dividends, valuation and analyst recommendations.

Institutional & Insider Ownership

21.9% of Youdao shares are owned by institutional investors. Comparatively, 49.0% of shares of all “Diversified Consumer Services” companies are owned by institutional investors. 43.0% of Youdao shares are owned by company insiders. Comparatively, 19.5% of shares of all “Diversified Consumer Services” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Youdao has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500. Comparatively, Youdao’s competitors have a beta of 0.50, indicating that their average stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Youdao and its competitors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Youdao	0	1	1	0	2.50
Youdao Competitors	1441	3445	5285	197	2.41

Youdao presently has a consensus target price of $22.00, suggesting a potential upside of 10.14%. As a group, “Diversified Consumer Services” companies have a potential upside of 61.15%. Given Youdao’s competitors higher probable upside, analysts plainly believe Youdao has less favorable growth aspects than its competitors.

Earnings and Valuation

This table compares Youdao and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Youdao	$822.04 million	$15.35 million	99.88
Youdao Competitors	$3.24 billion	$219.82 million	11.33

Youdao’s competitors have higher revenue and earnings than Youdao. Youdao is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Youdao and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Youdao	2.71%	-8.46%	8.78%
Youdao Competitors	-3.34%	-28.46%	2.40%

Summary

Youdao competitors beat Youdao on 7 of the 13 factors compared.

Youdao Company Profile

Youdao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. The company provides various learning content, applications, and solutions, which cover topics and target people from various age groups for their learning needs through its websites and mobile applications. It offers online knowledge tools, which include Youdao and other dictionaries and translation tools; learning services consisting of tutoring, fee-based premium, and other services; STEAM courses, adult and vocational courses, and other courses, such as China University MOOC; smart devices, such as Youdao Dictionary Pen, Youdao Listening Pod, Youdao Smart light, Youdao Pocket Translator, and Youdao Super Dictionary; education digitalization solutions comprising technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, Youdao Sports, and Youdao Smart Cloud; and online marketing services. In addition, the company provides online courses comprising Youdao Premium Courses and NetEase Cloud Classroom, as well as technical support to the variable interest entities (VIEs). Youdao, Inc. was founded in 2006 and is headquartered in Hangzhou, China. Youdao, Inc. is a subsidiary of NetEase, Inc.