Critical Analysis: iQIYI (IQ) & Netflix (NFLX)

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iQIYI (NASDAQ: NFLX) and Netflix (NASDAQ:NFLX) are both large-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Institutional and Insider Ownership

9.8% of iQIYI shares are held by institutional investors. Comparatively, 76.8% of Netflix shares are held by institutional investors. 4.3% of Netflix shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations for iQIYI and Netflix, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
iQIYI 0 3 1 0 2.25
Netflix 4 14 29 0 2.53

iQIYI currently has a consensus target price of $28.67, suggesting a potential upside of 2.05%. Netflix has a consensus target price of $348.36, suggesting a potential upside of 6.29%. Given Netflix’s stronger consensus rating and higher probable upside, analysts clearly believe Netflix is more favorable than iQIYI.

Profitability

This table compares iQIYI and Netflix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
iQIYI N/A N/A N/A
Netflix 7.13% 25.66% 5.02%

Earnings & Valuation

This table compares iQIYI and Netflix’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
iQIYI N/A N/A N/A N/A N/A
Netflix $11.69 billion 12.21 $558.92 million $1.25 262.18

Netflix has higher revenue and earnings than iQIYI.

Summary

Netflix beats iQIYI on 9 of the 9 factors compared between the two stocks.

iQIYI Company Profile

iQIYI, Inc., together with its subsidiaries, provides online entertainment services under the iQIYI brand name in China. It operates a platform that provides a collection of Internet video content, including professionally-produced content licensed from professional content providers and self-produced content. The company also operates movie theaters in China. In addition, it provides membership, content distribution, live broadcasting, and online gaming services. The company was formerly known as Qiyi.com, Inc. and changed its name to iQIYI, Inc. in November 2017. iQIYI, Inc. was incorporated in 2009 and is based in Beijing, China. iQIYI, Inc. is a subsidiary of Baidu Holdings Limited.

Netflix Company Profile

Netflix, Inc., an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. It operates in three segments: Domestic Streaming, International Streaming, and Domestic DVD. The company offers TV shows and movies, including original series, documentaries, and feature films. It offers members with the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes, and mobile devices. The company also provides DVDs-by-mail membership services. As of January 22, 2018, it had approximately 117 million members in 190 countries. Netflix, Inc. was founded in 1997 and is headquartered in Los Gatos, California.

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