Dropbox (NASDAQ:DBX – Get Free Report) and Tencent (OTCMKTS:TCEHY – Get Free Report) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, risk and profitability.
Profitability
This table compares Dropbox and Tencent’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Dropbox | 20.17% | -37.47% | 18.80% |
| Tencent | 29.87% | 18.85% | 11.24% |
Risk & Volatility
Dropbox has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Tencent has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Dropbox | 1 | 3 | 1 | 0 | 2.00 |
| Tencent | 0 | 1 | 2 | 1 | 3.00 |
Dropbox currently has a consensus target price of $27.50, suggesting a potential upside of 10.71%. Tencent has a consensus target price of $102.00, suggesting a potential upside of 55.49%. Given Tencent’s stronger consensus rating and higher probable upside, analysts clearly believe Tencent is more favorable than Dropbox.
Institutional and Insider Ownership
94.8% of Dropbox shares are owned by institutional investors. Comparatively, 0.0% of Tencent shares are owned by institutional investors. 30.0% of Dropbox shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Dropbox and Tencent”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Dropbox | $2.52 billion | 2.55 | $508.40 million | $1.86 | 13.35 |
| Tencent | $91.85 billion | 6.50 | $27.00 billion | $3.25 | 20.18 |
Tencent has higher revenue and earnings than Dropbox. Dropbox is trading at a lower price-to-earnings ratio than Tencent, indicating that it is currently the more affordable of the two stocks.
Summary
Tencent beats Dropbox on 11 of the 15 factors compared between the two stocks.
About Dropbox
Dropbox, Inc. provides a content collaboration platform worldwide. The company's platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was incorporated in 2007 and is headquartered in San Francisco, 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.
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