Financial Comparison: Tencent (OTCMKTS:TCEHY) versus Zillow Group (NASDAQ:ZG)

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Tencent and Zillow Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	1	1	2	0	2.25
Zillow Group	1	13	11	0	2.40

Tencent presently has a consensus target price of $106.00, suggesting a potential upside of 93.82%. Zillow Group has a consensus target price of $53.14, suggesting a potential upside of 61.95%. Given Tencent’s higher probable upside, research analysts plainly believe Tencent is more favorable than Zillow Group.

Earnings and Valuation

This table compares Tencent and Zillow Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent	$104.58 billion	4.76	$31.28 billion	$3.65	14.98
Zillow Group	$2.58 billion	2.86	$23.00 million	$0.22	149.14

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

Risk and Volatility

Tencent has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500. Comparatively, Zillow Group has a beta of 1.97, meaning that its share price is 97% more volatile than the S&P 500.

Institutional and Insider Ownership

0.0% of Tencent shares are held by institutional investors. Comparatively, 20.3% of Zillow Group shares are held by institutional investors. 29.9% of Zillow Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tencent	29.83%	19.98%	12.03%
Zillow Group	1.96%	2.32%	1.97%

Summary

Tencent beats Zillow Group on 8 of the 14 factors compared between the two stocks.

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.

About Zillow Group

Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. The company offers premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, and business technology solutions, as well as dotloop and floor plans. It also provides mortgage originations and the sale of mortgages, and advertising to mortgage lenders and other mortgage professionals; and title and escrow services. In addition, the company's brand portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, and Out East; and a suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce, and Follow Up Boss. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.