Chegg (NYSE: CHGG) and China Distance Education Holdings Limited (NYSE:DL) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.
China Distance Education Holdings Limited pays an annual dividend of $0.45 per share and has a dividend yield of 6.1%. Chegg does not pay a dividend. China Distance Education Holdings Limited pays out 57.7% of its earnings in the form of a dividend. Chegg has raised its dividend for 2 consecutive years.
This table compares Chegg and China Distance Education Holdings Limited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|China Distance Education Holdings Limited||20.98%||49.30%||15.47%|
Valuation & Earnings
This table compares Chegg and China Distance Education Holdings Limited’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Chegg||$253.32 million||5.54||-$7.45 million||($0.32)||-45.72|
|China Distance Education Holdings Limited||$122.87 million||1.97||$30.69 million||$0.78||9.41|
China Distance Education Holdings Limited has higher revenue, but lower earnings than Chegg. Chegg is trading at a lower price-to-earnings ratio than China Distance Education Holdings Limited, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
75.9% of Chegg shares are held by institutional investors. Comparatively, 19.6% of China Distance Education Holdings Limited shares are held by institutional investors. 20.4% of Chegg shares are held by insiders. Comparatively, 41.6% of China Distance Education Holdings Limited shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of current recommendations for Chegg and China Distance Education Holdings Limited, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|China Distance Education Holdings Limited||1||0||1||0||2.00|
Chegg presently has a consensus price target of $13.61, suggesting a potential downside of 6.96%. China Distance Education Holdings Limited has a consensus price target of $14.00, suggesting a potential upside of 90.74%. Given China Distance Education Holdings Limited’s higher possible upside, analysts plainly believe China Distance Education Holdings Limited is more favorable than Chegg.
Volatility and Risk
Chegg has a beta of 1.83, indicating that its share price is 83% more volatile than the S&P 500. Comparatively, China Distance Education Holdings Limited has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500.
Chegg Company Profile
Chegg, Inc. is a student-first connected learning platform. The Company helps students study for college admission exams, find the colleges, get grades and test scores while in school, and find internships that allow them to gain skills to help them enter the workforce after college. The Company matches domestic and international students with colleges, universities and other academic institutions (collectively referred to as colleges) in the United States. It also offers eTextbooks library for rent and sale. The Company also has live tutors on its connected learning platform available to students online, anytime, anywhere through its Chegg Tutors service. It provides access to internships to help students gain skills that are critical to securing their first job. It offers two product lines: Required Materials and Chegg Services. The Required Materials product line includes the rental and sale of print textbooks and eTextbooks, as well as the commission it receives from Ingram.
China Distance Education Holdings Limited Company Profile
China Distance Education Holdings Limited is a holding company. The Company is engaged in providing online and offline education services, and selling related products in the People’s Republic of China (PRC). The Company’s segments include online education services, business start-up training services and the sale of learning simulation software. The Company primarily sells books and reference materials related to its courses, such as the various levels of Accounting Professional Qualification Examinations, accounting continuing education, the National Practicing Medical Doctor Qualification Examination, the National Pharmacist Qualification Examination, and Associate Constructor and Constructor Qualification Examinations. It offers college oriented online-to-offline products and services, business start-up training courses and others. The Company had a content library with 263 course offerings of audio-video content, as of September 30, 2016.
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