Cheetah Mobile (NYSE: CMCM) and Sito Mobile (NASDAQ:SITO) are both small-cap technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Risk and Volatility

Cheetah Mobile has a beta of 3.24, suggesting that its stock price is 224% more volatile than the S&P 500. Comparatively, Sito Mobile has a beta of -1.24, suggesting that its stock price is 224% less volatile than the S&P 500.

Profitability

This table compares Cheetah Mobile and Sito Mobile’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cheetah Mobile 7.44% 10.76% 6.35%
Sito Mobile -29.34% -47.82% -25.15%

Institutional and Insider Ownership

7.2% of Cheetah Mobile shares are owned by institutional investors. Comparatively, 12.5% of Sito Mobile shares are owned by institutional investors. 17.1% of Cheetah Mobile shares are owned by insiders. Comparatively, 6.5% of Sito Mobile shares are owned by insiders. 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.

Analyst Ratings

This is a summary of current ratings and price targets for Cheetah Mobile and Sito Mobile, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cheetah Mobile 0 3 0 0 2.00
Sito Mobile 0 1 5 0 2.83

Cheetah Mobile presently has a consensus target price of $11.67, indicating a potential upside of 11.22%. Sito Mobile has a consensus target price of $8.80, indicating a potential upside of 29.41%. Given Sito Mobile’s stronger consensus rating and higher possible upside, analysts plainly believe Sito Mobile is more favorable than Cheetah Mobile.

Valuation & Earnings

This table compares Cheetah Mobile and Sito Mobile’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cheetah Mobile $657.45 million 2.29 -$11.59 million $0.39 26.90
Sito Mobile $29.43 million 5.09 -$1.40 million ($0.51) -13.33

Sito Mobile has lower revenue, but higher earnings than Cheetah Mobile. Sito Mobile is trading at a lower price-to-earnings ratio than Cheetah Mobile, indicating that it is currently the more affordable of the two stocks.

Summary

Cheetah Mobile beats Sito Mobile on 8 of the 14 factors compared between the two stocks.

Cheetah Mobile Company Profile

Cheetah Mobile Inc. is a holding company. The Company and its consolidated subsidiaries, variable interest entities (VIEs) and a VIE’s subsidiary are engaged in the provision of online marketing services, Internet value-added services, and Internet security services and others. The Company operates a platform that offers mobile and personal computer (PC) applications for its users and global content promotional channels for its customers, both of which are powered by its cloud-based data analytics engines. For its users, its diversified suite of applications optimizes mobile and PC Internet system performance, and provides real time protection against known and unknown security threats. Its data analytics engines perform real time analysis of mobile applications, program files and Websites on their devices for behavior that may impair system performance or impose security risks.

Sito Mobile Company Profile

SITO Mobile, Ltd. operates a mobile location-based advertising platform serving businesses, advertisers and brands. The Company’s offerings include SITO Location-Based Advertising and SITO Mobile Messaging. SITO Location-Based Advertising delivers display advertisements and videos on behalf of advertisers, including various features, such as Geo-fencing, Verified walk-in, Behavioral Targeting, and Analytics and Optimization. Geo-fencing targets customers within a certain radius of location and uses technology to push coupons, advertisements and promotions to mobile applications. Verified Walk-in tracks foot-traffic to locations and which advertisements drive action. Behavioral Targeting tracks past behaviors over 30 to 90 day increments allowing for real-time campaign management. Analytics and Optimization is a culling and building measurement system. SITO Mobile Messaging is a platform for building and controlling programs, including messaging and customer incentive programs.

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