Critical Review: The9 (NASDAQ:NCTY) versus Tucows (NASDAQ:TCX)

The9 (NASDAQ:NCTY) and Tucows (NASDAQ:TCX) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Risk & Volatility

The9 has a beta of 2.42, indicating that its share price is 142% more volatile than the S&P 500. Comparatively, Tucows has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Profitability

This table compares The9 and Tucows’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The9	N/A	N/A	N/A
Tucows	-19.43%	N/A	-8.88%

Analyst Recommendations

This is a breakdown of current ratings and price targets for The9 and Tucows, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The9	1	0	0	0	1.00
Tucows	1	0	0	0	1.00

Earnings and Valuation

This table compares The9 and Tucows”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The9	$15.31 million	5.43	-$10.06 million	N/A	N/A
Tucows	$390.30 million	0.51	-$75.82 million	($6.84)	-2.63

The9 has higher earnings, but lower revenue than Tucows.

Insider & Institutional Ownership

0.5% of The9 shares are owned by institutional investors. Comparatively, 73.6% of Tucows shares are owned by institutional investors. 30.8% of The9 shares are owned by insiders. Comparatively, 11.6% of Tucows shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

The9 beats Tucows on 6 of the 8 factors compared between the two stocks.

About The9

The9 Limited operates as a cryptocurrency mining business in China, Eastern Europe, Asia, and North America. The company was formerly known as GameNow.net Limited and changed its name to The9 Limited in February 2004. The9 Limited was incorporated in 1999 and is headquartered in Shanghai, the People’s Republic of China.

About Tucows

Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in North America and Europe. It operates in three segments: Ting, Wavelo and Tucows Domains. The Ting segment provides fiber and fixed wireless internet services. The Wavelo segment offers individual developer tools, subscription, billing management, network orchestration, and provisioning services. This segment also provides billing solutions under Platypus brand. The Tucows Domains segment offers name registration, as well as value added services under OpenSRS, eNom, Ascio, EPAG, and Hover brands. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.