Zillow Group (NASDAQ:Z) & Square Enix (OTCMKTS:SQNXF) Critical Review

Square Enix (OTCMKTS:SQNXF) and Zillow Group (NASDAQ:Z) are both mid-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Volatility and Risk

Square Enix has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Zillow Group has a beta of 2.07, meaning that its share price is 107% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Square Enix and Zillow Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Square Enix	1	0	0	0	1.00
Zillow Group	1	6	2	3	2.58

Zillow Group has a consensus target price of $79.75, suggesting a potential upside of 98.58%. Given Zillow Group’s stronger consensus rating and higher possible upside, analysts clearly believe Zillow Group is more favorable than Square Enix.

Profitability

This table compares Square Enix and Zillow Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Square Enix	N/A	N/A	N/A
Zillow Group	2.27%	1.41%	1.22%

Institutional and Insider Ownership

71.0% of Zillow Group shares are owned by institutional investors. 23.8% of Zillow Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Square Enix and Zillow Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Square Enix	$2.13 billion	2.51	$161.13 million	$0.67	22.16
Zillow Group	$2.58 billion	3.73	$23.00 million	$0.25	160.64

Square Enix has higher earnings, but lower revenue than Zillow Group. Square Enix is trading at a lower price-to-earnings ratio than Zillow Group, indicating that it is currently the more affordable of the two stocks.

Summary

Zillow Group beats Square Enix on 13 of the 15 factors compared between the two stocks.

About Square Enix

Square Enix Holdings Co., Ltd. operates in the content and service businesses in Japan and internationally. It operates through Digital Entertainment Business, Amusement Business, Publishing Business, and Rights Property Business. The company plans, develops, sells, and manages digital entertainment content primarily in the form of computer games. It is also involved in the operation of amusement facilities; and planning, development, manufacture, sale, and rental of arcade game machines and related products for amusement facilities. In addition, the company publishes and licenses comic books, magazines, game-related books, periodicals, etc. Further, it plans, produces, distributes, and licenses secondary works; and offers content under the SQUARE ENIX PRODUCTS brand; and stuffed toys and utility goods under the SQEX TOYS brand. The company was incorporated in 1975 and is headquartered in Tokyo, Japan.

About Zillow Group

Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. The company offers premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, and business technology solutions, as well as dotloop and floor plans. It also provides mortgage originations and the sale of mortgages, and advertising to mortgage lenders and other mortgage professionals; and title and escrow services. In addition, the company's brand portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, and Out East; and a suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce, and Follow Up Boss. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.