Financial Comparison: Tencent (OTCMKTS:TCEHY) versus Meta Platforms (NASDAQ:META)

Meta Platforms (NASDAQ:META) and Tencent (OTCMKTS:TCEHY) are both large-cap communication services companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Institutional & Insider Ownership

79.9% of Meta Platforms shares are held by institutional investors. Comparatively, 0.0% of Tencent shares are held by institutional investors. 13.5% of Meta Platforms shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Meta Platforms and Tencent, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meta Platforms	0	8	47	3	2.91
Tencent	0	2	1	0	2.33

Meta Platforms currently has a consensus target price of $833.12, suggesting a potential upside of 29.64%. Tencent has a consensus target price of $88.00, suggesting a potential upside of 78.10%. Given Tencent’s higher probable upside, analysts plainly believe Tencent is more favorable than Meta Platforms.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Meta Platforms	31.15%	30.73%	18.08%
Tencent	29.83%	19.83%	11.76%

Valuation & Earnings

This table compares Meta Platforms and Tencent”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meta Platforms	$200.97 billion	8.15	$60.46 billion	$26.55	24.20
Tencent	$104.58 billion	4.30	$31.28 billion	$3.65	13.54

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

Volatility & Risk

Meta Platforms has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Tencent has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500.

Dividends

Meta Platforms pays an annual dividend of $2.10 per share and has a dividend yield of 0.3%. Tencent pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Meta Platforms pays out 7.9% of its earnings in the form of a dividend. Tencent pays out 16.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Meta Platforms has increased its dividend for 1 consecutive years.

Summary

Meta Platforms beats Tencent on 16 of the 18 factors compared between the two stocks.

About Meta Platforms

Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately. The Reality Labs segment provides augmented and virtual reality related products comprising consumer hardware, software, and content that help people feel connected, anytime, and anywhere. The company was formerly known as Facebook, Inc. and changed its name to Meta Platforms, Inc. in October 2021. The company was incorporated in 2004 and is headquartered in Menlo Park, 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.