The Western Union (NYSE:WU) and NetEase (NASDAQ:NTES) are both large-cap business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, profitability, institutional ownership, analyst recommendations, dividends and earnings.
This is a breakdown of recent ratings and target prices for The Western Union and NetEase, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Western Union||1||3||0||0||1.75|
The Western Union currently has a consensus target price of $19.00, indicating a potential downside of 16.52%. NetEase has a consensus target price of $292.68, indicating a potential upside of 8.25%. Given NetEase’s stronger consensus rating and higher probable upside, analysts plainly believe NetEase is more favorable than The Western Union.
Earnings & Valuation
This table compares The Western Union and NetEase’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|The Western Union||$5.59 billion||1.73||$851.90 million||$1.92||11.85|
|NetEase||$9.77 billion||3.64||$930.91 million||$6.87||39.36|
NetEase has higher revenue and earnings than The Western Union. The Western Union is trading at a lower price-to-earnings ratio than NetEase, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
The Western Union has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, NetEase has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.
This table compares The Western Union and NetEase’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Western Union||22.11%||-309.12%||9.06%|
Institutional & Insider Ownership
45.6% of NetEase shares are owned by institutional investors. 1.3% of The Western Union shares are owned by insiders. Comparatively, 54.7% of NetEase shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
The Western Union pays an annual dividend of $0.80 per share and has a dividend yield of 3.5%. NetEase pays an annual dividend of $4.15 per share and has a dividend yield of 1.5%. The Western Union pays out 41.7% of its earnings in the form of a dividend. NetEase pays out 60.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Western Union has raised its dividend for 4 consecutive years. The Western Union is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
NetEase beats The Western Union on 13 of the 17 factors compared between the two stocks.
About The Western Union
The Western Union Company provides money movement and payment services worldwide. The company operates in two segments, Consumer-to-Consumer and Business Solutions. The Consumer-to-Consumer segment facilitates money transfers between two consumers, primarily through a network of third-party agents. This segment offers international cross-border transfers and intra-country transfers, as well as money transfer transactions through Websites and mobile devices. The Business Solutions segment provides payment and foreign exchange solutions, primarily cross-border and cross-currency transactions for small and medium size enterprises, other organizations, and individuals; and foreign currency forward and option contracts. The company also facilitates bill payments from consumers to businesses and other organizations, as well as offers money order and other services. It serves primarily through a network of agents. The Western Union Company was incorporated in 2006 and is headquartered in Denver, Colorado.
NetEase, Inc. operates an interactive online community in the People's Republic of China. The company operates in four segments: Online Games Services, E-Commerce, Advertising Services, and Innovative Businesses and Other Services. It offers various games in a range of genres through mobile devices and PCs, including role-playing games, MMORPGs, battle arena games, simulation games, collectible card games, first-person shooter games, sandbox games, and other types of games to the Chinese market. The company also operates Kaola that sells imported maternity and baby products, skincare and cosmetics, and other general merchandise; and Yanxuan, which sells its private label products, including apparel, homeware, kitchenware, and other general merchandise. In addition, it operates NetEase News App and NetEase Websites, which provide Internet users with Chinese language-based online services that are centered around content and interactive community. Further, the company provides online advertising services comprising banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities. Additionally, it offers online services, such as NetEase CC, a live video streaming platform; NetEase Cloud Music, a music-streaming platform; NetEase Youdao Education, an online platform offering educational content and solutions; EaseRead, an online reading platform; and NetEase Pay, a payment platform, as well as email services to individuals and corporates. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Beijing, the People's Republic of China.
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