Analyzing Baidu (NASDAQ:BIDU) and Square Enix (OTCMKTS:SQNXF)

Square Enix (OTCMKTS:SQNXF) and Baidu (NASDAQ:BIDU) are both communication services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Volatility & Risk

Square Enix has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500. Comparatively, Baidu has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Square Enix and Baidu, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Square Enix	0	0	0	1	4.00
Baidu	3	4	12	0	2.47

Baidu has a consensus target price of $144.27, indicating a potential upside of 86.87%. Given Baidu’s higher possible upside, analysts clearly believe Baidu is more favorable than Square Enix.

Profitability

This table compares Square Enix and Baidu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Square Enix	N/A	N/A	N/A
Baidu	-2.63%	4.30%	2.64%

Valuation and Earnings

This table compares Square Enix and Baidu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Square Enix	$1.98 billion	3.28	$195.47 million	$0.75	24.01
Baidu	$18.46 billion	1.42	$799.00 million	($2.11)	-36.59

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

Summary

Baidu beats Square Enix on 7 of the 12 factors compared between the two stocks.

About Square Enix

Square Enix Holdings Co., Ltd. operates in the content and service businesses in Japan and internationally. It operates through Digital Entertainment Business, Amusement Business, Publishing Business, and Rights Property Business. The company plans, develops, sells, and manages digital entertainment content primarily in the form of computer games. It is also involved in the operation of amusement facilities; and planning, development, manufacture, sale, and rental of arcade game machines and related products for amusement facilities. In addition, the company publishes and licenses comic books, magazines, game-related books, periodicals, etc. Further, it plans, produces, distributes, and licenses secondary works; and offers content under the SQUARE ENIX PRODUCTS brand; and stuffed toys and utility goods under the SQEX TOYS brand. The company was incorporated in 1975 and is headquartered in Tokyo, Japan.

About Baidu

Baidu, Inc. engages in the provision of internet search services in China. It operates through two segments: Baidu Core and iQIYI. The company offers Baidu App to access search, feed, and other services using mobile devices; Baidu Search to access its search and other services; Baidu Feed that provides users with personalized timeline based on their demographics and interests; Baidu Health that helps users to find the doctor and hospital for healthcare needs; and Haokan, a short video app. It also provides Baidu Knows, an online community where users can ask questions to other users; Baidu Wiki; Baidu Experience; Baidu Post; ERNIE Bot, conversational AI bot; Baidu Wenku; Baidu Maps, a voice-enabled mobile app that provides travel-related services; Baidu Drive; Baijiahao; and DuerOS, a smart assistant platform. In addition, it offers online marketing services, which include pay for performance, an auction-based services that allow customers to bid for priority placement of paid sponsored links and reach users who search for information related to their products or services; other marketing services that include display-based marketing services and other online marketing services based on performance criteria other than cost per click; mobile ecosystem, a portfolio of apps, including Baidu App, Haokan, and Baidu Post; various cloud services and solutions, such as platform as a service, software as a service, and infrastructure as a service; self-driving services, including maps, automated valet parking, navigation pilot, electric vehicles, and robotaxi fleets, as well as Xiaodu smart devices. Further, the company provides iQIYI, an online entertainment service, including original and licensed content; other video content and membership; and online advertising services. It has strategic partnership with Zhejiang Geely Holding Group. The company was formerly known as Baidu.com, Inc. Baidu, Inc. was incorporated in 2000 and is headquartered in Beijing, China.