Critical Survey: Manchester United (NYSE:MANU) and NetEase (NASDAQ:NTES)

NetEase (NASDAQ:NTES) and Manchester United (NYSE:MANU) are both communication services companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.

Valuation & Earnings

This table compares NetEase and Manchester United”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetEase	$16.11 billion	4.74	$4.83 billion	$7.26	16.43
Manchester United	$684.33 million	5.26	-$42.74 million	($0.14)	-149.07

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

Profitability

This table compares NetEase and Manchester United’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetEase	27.86%	19.50%	14.45%
Manchester United	-2.67%	0.64%	0.07%

Dividends

NetEase pays an annual dividend of $1.91 per share and has a dividend yield of 1.6%. Manchester United pays an annual dividend of $0.09 per share and has a dividend yield of 0.4%. NetEase pays out 26.3% of its earnings in the form of a dividend. Manchester United pays out -64.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional and Insider Ownership

11.1% of NetEase shares are held by institutional investors. Comparatively, 23.3% of Manchester United shares are held by institutional investors. 54.7% of NetEase shares are held by company insiders. Comparatively, 68.6% of Manchester United shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility & Risk

NetEase has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Manchester United has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for NetEase and Manchester United, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	0	3	7	0	2.70
Manchester United	1	0	0	0	1.00

NetEase presently has a consensus target price of $160.57, suggesting a potential upside of 34.61%. Given NetEase’s stronger consensus rating and higher probable upside, equities analysts clearly believe NetEase is more favorable than Manchester United.

Summary

NetEase beats Manchester United on 12 of the 16 factors compared between the two stocks.

About NetEase

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally . The company operates through Games and Related Value-Added Services, Youdao, Cloud Music, and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, Youdao Listening Pod, Youdao Smart Light, Youdao Pocket Translator, and Youdao Super Dictionary; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services also include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.

About Manchester United

Manchester United plc, together with its subsidiaries, owns and operates a professional sports team in the United Kingdom. It operates Manchester United Football Club, a professional football club. The company develops marketing and sponsorship relationships with international and regional companies to leverage its brand. It also markets and sells sports apparel, training and leisure wear, and other clothing; and other licensed products, such as coffee mugs and bed spreads featuring the Manchester United brand and trademarks, as well as distributes these products through Manchester United branded retail centers and e-commerce platforms, and through the company’s partners’ wholesale distribution channels. In addition, the company distributes live football content directly, as well as through commercial partners; broadcasts television rights relating to the Premier League, Union of European Football Associations club competitions, and other competitions; and delivers Manchester United programming through MUTV television channel to territories worldwide. Further, it operates Old Trafford, a sports venue with 74,240 seats, as well as invests in properties. The company was formerly known as Manchester United Ltd. changed its name to Manchester United plc in August 2012. Manchester United plc was founded in 1878 and is headquartered in Manchester, the United Kingdom.