China Online Education Group (NYSE: COE) and Franklin Covey (NYSE:FC) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Insider & Institutional Ownership

24.0% of China Online Education Group shares are held by institutional investors. Comparatively, 52.2% of Franklin Covey shares are held by institutional investors. 33.5% of Franklin Covey shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for China Online Education Group and Franklin Covey, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Online Education Group 0 0 0 0 N/A
Franklin Covey 0 2 1 0 2.33

Franklin Covey has a consensus price target of $22.00, indicating a potential upside of 6.02%. Given Franklin Covey’s higher probable upside, analysts plainly believe Franklin Covey is more favorable than China Online Education Group.

Profitability

This table compares China Online Education Group and Franklin Covey’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Online Education Group -92.66% N/A -71.07%
Franklin Covey -3.87% -5.47% -2.68%

Volatility and Risk

China Online Education Group has a beta of -0.7, meaning that its share price is 170% less volatile than the S&P 500. Comparatively, Franklin Covey has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Earnings & Valuation

This table compares China Online Education Group and Franklin Covey’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
China Online Education Group $60.24 million 4.39 -$74.14 million ($4.13) -3.19
Franklin Covey $185.26 million 1.55 $7.01 million ($0.53) -39.15

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

Summary

Franklin Covey beats China Online Education Group on 10 of the 12 factors compared between the two stocks.

About China Online Education Group

China Online Education Group is engaged in providing online English language education services to students in the People’s Republic of China (the PRC). The Company operates an online education platform that provides online tutoring programs to students through the Internet. Its platform analyzes teachers’ teaching aptitudes, feedback and rating from students, as well as background, and recommends suitable teachers to students according to their respective characteristics and learning objectives. The Company develops and tailors its curriculum to its interactive lesson format. The Company offers various courses, which include Classic English and Classic English Junior that are focused on the development of English communication skills. The Company also offers various specialty courses that are focused at situation-based English education and test preparation needs, such as Business English and International English Language Testing System (IELTS) Speaking.

About Franklin Covey

Franklin Covey Co. is a global company specializing in performance improvement. The Company’s segments are Direct Offices, Strategic Markets, Education practice and International Licensees. The Direct Offices segment consists of its geographic sales offices that serve the United States and Canada, its international sales offices located in Japan, the United Kingdom and Australia, and its public programs group. The Strategic Markets segment includes its government services office, the Sales Performance practice, the Customer Loyalty practice, and a new Global 50 group, which is specifically focused on sales to large, multi-national organizations. The Education practice segment consists of its domestic and international Education practice operations, which are centered on sales to educational institutions, such as elementary schools, high schools, and colleges and universities. The International Licensees segment consists of its international licensees’ royalty revenues.

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