Yirendai (NYSE: YRD) and YY (NASDAQ:YY) are both mid-cap internet services – nec companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, profitability, institutional ownership, valuation and risk.

Insider and Institutional Ownership

6.6% of Yirendai shares are held by institutional investors. Comparatively, 57.4% of YY shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Yirendai and YY’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Yirendai $466.37 million 5.35 $160.79 million $3.35 12.46
YY $1.18 billion 4.23 $219.49 million $5.42 16.46

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

Profitability

This table compares Yirendai and YY’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yirendai 32.37% 80.79% 36.20%
YY 22.08% 39.07% 22.15%

Dividends

Yirendai pays an annual dividend of $1.48 per share and has a dividend yield of 3.5%. YY does not pay a dividend. Yirendai pays out 44.2% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations for Yirendai and YY, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yirendai 1 0 3 0 2.50
YY 1 5 8 0 2.50

Yirendai currently has a consensus target price of $39.33, indicating a potential downside of 5.79%. YY has a consensus target price of $71.46, indicating a potential downside of 19.91%. Given Yirendai’s higher probable upside, research analysts clearly believe Yirendai is more favorable than YY.

Summary

YY beats Yirendai on 7 of the 13 factors compared between the two stocks.

Yirendai Company Profile

Yirendai Ltd. is engaged in online consumer finance marketplace business in China. The Company conducts its business in China, through Yi Ren Heng Ye Technology Development (Beijing) Co., Ltd. (Heng Ye) and its consolidated variable interest entity, Heng Cheng Technology Development (Beijing) Co., Ltd. (Heng Cheng). Heng Cheng operates its Website, www.yirendai.com, and has an Internet content provider (ICP) license as an Internet information provider. Its online marketplace facilitates standard loan products, express loan products and vertical loan products to borrowers. Uses for these loan products include home remodels, durable good purchases, travel and continuing education. Its online marketplace provides investors with various investing tools, such as automated investing tool and self-directed investing tool. It maintains a secondary loan market on its marketplace where investors can transfer the loans they hold prior to maturity at the fair value of the remaining loans.

YY Company Profile

YY Inc. (YY) is a social platform that engages users in real-time online group activities through voice, video and text on personal computers and mobile devices. The Company’s segments include YY IVAS and others, Huya broadcasting, and 100 Education. YY enables users to create and organize groups of varying sizes to discover and participate in a range of online activities, including music shows, online games, dating shows, live game broadcasting and e-learning. YY offers users an entertainment experience through its social community. It owns the domain names of YY.com, Duowan.com, 100.com, Huya.com, Edu24ol.com and Zhiniu8.com. The Company’s YY platform, including YY.com, is jointly operated by personnel from Guangzhou Huaduo and Zhuhai Duowan. Its product, YY Client, enables users to engage in live interactions online. Its Web-based YY enables users to conduct real-time interactions through Web browsers without requiring any downloads or installations.

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