Analyzing NetEase (NASDAQ:NTES) & Sprout Social (NASDAQ:SPT)

Sprout Social (NASDAQ:SPT) and NetEase (NASDAQ:NTES) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sprout Social and NetEase, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprout Social	1	7	7	0	2.40
NetEase	0	2	5	0	2.71

Sprout Social currently has a consensus price target of $45.46, suggesting a potential upside of 40.10%. NetEase has a consensus price target of $107.29, suggesting a potential upside of 16.50%. Given Sprout Social’s higher probable upside, equities analysts plainly believe Sprout Social is more favorable than NetEase.

Earnings & Valuation

This table compares Sprout Social and NetEase”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprout Social	$392.40 million	4.75	-$66.43 million	($1.20)	-27.04
NetEase	$105.69 billion	0.56	$4.14 billion	$5.92	15.56

NetEase has higher revenue and earnings than Sprout Social. Sprout Social 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 Sprout Social and NetEase’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sprout Social	-17.24%	-40.94%	-15.70%
NetEase	26.02%	20.82%	14.68%

Volatility and Risk

Sprout Social has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, NetEase has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Institutional & Insider Ownership

11.1% of NetEase shares are held by institutional investors. 11.0% of Sprout Social shares are held by company insiders. Comparatively, 54.7% of NetEase shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

NetEase beats Sprout Social on 10 of the 14 factors compared between the two stocks.

About Sprout Social

Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company provides cloud software for social messaging, data and workflows in a unified system of record, intelligence, and action. It offers integrated tools, such as social engagement/response; publishing; reporting and analytics; social listening and business intelligence; reputation management; social commerce; employee advocacy; and automation and workflows. In addition, the company provides smart inbox, social customer relationship management, social monitoring and alerts, customer service tools, and automation; and centralized content planning, creation, and publishing, automated scheduling, content performance reporting, suggested content, message approval workflows, publishing permissions and governance, and content and asset libraries. Further, it offers social media; content performance, customer service and team, custom report builder, and reporting API; and market research, brand health, competitive insights, consumer trends, and product feedback; and social commerce, reputation management, employee advocacy, mobile applications, and chat bot creation and management. Additionally, the company offers professional services consisting of consulting and training services. It serves social and community management; public relations; marketing; influencer marketing; customer service and care; commerce, sales and customer acquisition; recruiting and hiring, product development, and business strategy; and small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. Sprout Social, Inc. was incorporated in 2010 and is headquartered in Chicago, Illinois.

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.