WEBTOON Entertainment (NASDAQ:WBTN – Get Free Report) and Zhihu (NYSE:ZH – Get Free Report) are both small-cap communication services companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.
Profitability
This table compares WEBTOON Entertainment and Zhihu’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| WEBTOON Entertainment | -25.09% | 2.10% | 1.60% |
| Zhihu | -11.33% | -7.71% | -5.75% |
Analyst Recommendations
This is a summary of recent ratings and target prices for WEBTOON Entertainment and Zhihu, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| WEBTOON Entertainment | 1 | 5 | 1 | 0 | 2.00 |
| Zhihu | 1 | 0 | 0 | 0 | 1.00 |
Institutional and Insider Ownership
28.9% of Zhihu shares are owned by institutional investors. 5.6% of WEBTOON Entertainment shares are owned by company insiders. Comparatively, 13.6% of Zhihu shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares WEBTOON Entertainment and Zhihu”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| WEBTOON Entertainment | $1.38 billion | 1.06 | -$345.93 million | ($2.63) | -4.13 |
| Zhihu | $393.10 million | 0.66 | -$27.58 million | ($0.55) | -5.41 |
Zhihu has lower revenue, but higher earnings than WEBTOON Entertainment. Zhihu is trading at a lower price-to-earnings ratio than WEBTOON Entertainment, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
WEBTOON Entertainment has a beta of 2.62, suggesting that its share price is 162% more volatile than the S&P 500. Comparatively, Zhihu has a beta of 0.26, suggesting that its share price is 74% less volatile than the S&P 500.
Summary
WEBTOON Entertainment beats Zhihu on 9 of the 14 factors compared between the two stocks.
About WEBTOON Entertainment
WEBTOON Entertainment Inc. operates a storytelling platform worldwide. The company’s platform allows a community of creators and users to discover, create, and share new content. Its platform offers stories primarily in two ways, including web-comics, a graphical comic-like medium; and web-novels, which are text-based stories. The company was founded in 2014 and is headquartered in Los Angeles, California. WEBTOON Entertainment Inc. is a subsidiary of NAVER Corporation.
About Zhihu
Zhihu Inc. operates an online content community in the People’s Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People’s Republic of China.
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