China Distance Education Holdings Limited (NYSE: DL) and Houghton Mifflin Harcourt (NASDAQ:HMHC) are both small-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, analyst recommendations, profitabiliy, institutional ownership, dividends and earnings.

Profitability

This table compares China Distance Education Holdings Limited and Houghton Mifflin Harcourt’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%
Houghton Mifflin Harcourt -17.29% -12.53% -4.08%

Institutional & Insider Ownership

19.6% of China Distance Education Holdings Limited shares are owned by institutional investors. 1.3% of Houghton Mifflin Harcourt shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

China Distance Education Holdings Limited has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500. Comparatively, Houghton Mifflin Harcourt has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Dividends

China Distance Education Holdings Limited pays an annual dividend of $0.45 per share and has a dividend yield of 5.6%. Houghton Mifflin Harcourt does not pay a dividend. China Distance Education Holdings Limited pays out 57.7% of its earnings in the form of a dividend. China Distance Education Holdings Limited has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a summary of current ratings and recommmendations for China Distance Education Holdings Limited and Houghton Mifflin Harcourt, as provided 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
Houghton Mifflin Harcourt 0 2 2 1 2.80

China Distance Education Holdings Limited presently has a consensus price target of $14.00, suggesting a potential upside of 75.66%. Houghton Mifflin Harcourt has a consensus price target of $18.30, suggesting a potential upside of 55.74%. Given China Distance Education Holdings Limited’s higher probable upside, equities research analysts clearly believe China Distance Education Holdings Limited is more favorable than Houghton Mifflin Harcourt.

Earnings and Valuation

This table compares China Distance Education Holdings Limited and Houghton Mifflin Harcourt’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
China Distance Education Holdings Limited $122.87 million 2.14 $30.69 million $0.78 10.22
Houghton Mifflin Harcourt $1.39 billion 1.04 $45.54 million ($1.96) -5.99

Houghton Mifflin Harcourt has higher revenue and earnings than China Distance Education Holdings Limited. Houghton Mifflin Harcourt 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.

Summary

China Distance Education Holdings Limited beats Houghton Mifflin Harcourt on 10 of the 17 factors compared between the two stocks.

About China Distance Education Holdings Limited

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.

About Houghton Mifflin Harcourt

Houghton Mifflin Harcourt Company (HMH) is a global learning company, specializing in education solutions across a range of media. The Company operates through two segments: Education and Trade Publishing. As of December 31, 2016, the Company delivered content, services and technology to both educational institutions and consumers, reaching over 50 million students in approximately 150 countries across the world. It sells its products and services across multiple media and distribution channels. Its Education segment provides educational content, services and technology solutions to meet the diverse needs of classrooms. Its Trade Publishing segment develops, markets and sells consumer books in print and digital formats, and licenses book rights to other publishers and electronic businesses in the United States and abroad.

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