MediaAlpha (NYSE:MAX) versus Tencent (OTCMKTS:TCEHY) Critical Review

MediaAlpha (NYSE:MAX) and Tencent (OTCMKTS:TCEHY) are both communication services companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for MediaAlpha and Tencent, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MediaAlpha	0	4	3	2	2.78
Tencent	1	1	2	0	2.25

MediaAlpha presently has a consensus target price of $14.29, indicating a potential upside of 51.41%. Tencent has a consensus target price of $106.00, indicating a potential upside of 90.68%. Given Tencent’s higher possible upside, analysts clearly believe Tencent is more favorable than MediaAlpha.

Valuation & Earnings

This table compares MediaAlpha and Tencent”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MediaAlpha	$1.11 billion	0.52	$25.62 million	$1.62	5.82
Tencent	$104.58 billion	4.84	$31.28 billion	$3.65	15.23

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

Insider & Institutional Ownership

64.4% of MediaAlpha shares are held by institutional investors. Comparatively, 0.0% of Tencent shares are held by institutional investors. 14.6% of MediaAlpha shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares MediaAlpha and Tencent’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MediaAlpha	7.94%	-301.42%	28.23%
Tencent	29.83%	19.83%	11.76%

Volatility and Risk

MediaAlpha has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Tencent has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500.

Summary

Tencent beats MediaAlpha on 8 of the 15 factors compared between the two stocks.

About MediaAlpha

MediaAlpha, Inc., through its subsidiaries, operates an insurance customer acquisition platform in the United States. It optimizes customer acquisition in various verticals of property and casualty insurance, health insurance, and life insurance. The company was founded in 2014 and is headquartered in Los Angeles, California.

About Tencent

Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.