Leaf Group (NYSE: LFGR) and Bitauto (NYSE:BITA) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Earnings & Valuation

This table compares Leaf Group and Bitauto’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Leaf Group $113.45 million 1.30 -$2.01 million ($1.58) -4.68
Bitauto $831.50 million 2.48 -$50.57 million ($2.86) -10.05

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

Insider and Institutional Ownership

65.8% of Leaf Group shares are held by institutional investors. Comparatively, 27.4% of Bitauto shares are held by institutional investors. 47.6% of Leaf Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Leaf Group and Bitauto’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Leaf Group -25.98% -44.59% -34.40%
Bitauto -11.69% -2.10% -0.70%

Analyst Ratings

This is a summary of current ratings and recommmendations for Leaf Group and Bitauto, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Leaf Group 0 1 4 0 2.80
Bitauto 0 0 2 0 3.00

Leaf Group presently has a consensus price target of $10.30, indicating a potential upside of 39.19%. Bitauto has a consensus price target of $40.00, indicating a potential upside of 39.23%. Given Bitauto’s stronger consensus rating and higher possible upside, analysts clearly believe Bitauto is more favorable than Leaf Group.

Risk and Volatility

Leaf Group has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, Bitauto has a beta of 2.78, suggesting that its share price is 178% more volatile than the S&P 500.

Summary

Bitauto beats Leaf Group on 8 of the 14 factors compared between the two stocks.

About Leaf Group

Leaf Group Ltd., formerly Demand Media, Inc., is diversified Internet marketplaces and media company. The Company has online media properties and marketplace platforms that enable communities of creators to reach audiences in lifestyle categories. The Company operates an online studio platform for the professional creation and distribution of content, as well as two online artist marketplaces. Its business comprises two service offerings: Content & Media and Marketplaces. The Company creates media content, including text articles, videos, photographs and designed visual formats, and publishes such content to its owned and operated online properties and to its customers’ online properties. The Company also offers its content creation and distribution platform to provide custom content and other content marketing solutions to brands, publishers and advertisers.

About Bitauto

Bitauto Holdings Limited is a provider of Internet content and marketing services for China’s automotive industry. The Company’s bitauto.com and taoche.com Websites provide consumers with information on new and used automobile pricing, and promotional information, specifications, reviews and consumer feedback. The Company operates through three segments: advertising business, EP platform business and digital marketing solutions business. The advertising business offers a range of advertising services mainly to automakers through its Websites, as well as mobile applications. The EP platform business provides Web-based and mobile-based integrated digital marketing solutions to automobile customers in China. The digital marketing solutions business provides automakers with digital marketing solutions, including Website creation and maintenance, online public relations, online marketing campaigns and advertising agent services.

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