Zynga (NASDAQ: ZNGA) and Perfect World Co. (NASDAQ:PWRD) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitabiliy, dividends, institutional ownership and earnings.

Valuation & Earnings

This table compares Zynga and Perfect World Co.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zynga $748.98 million 4.34 -$79.42 million ($0.11) -34.36
Perfect World Co. N/A N/A N/A N/A N/A

Perfect World Co. has higher revenue, but lower earnings than Zynga.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Zynga and Perfect World Co., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zynga 0 4 8 0 2.67
Perfect World Co. 0 0 0 0 N/A

Zynga presently has a consensus price target of $3.89, suggesting a potential upside of 2.93%. Given Zynga’s higher possible upside, analysts plainly believe Zynga is more favorable than Perfect World Co..

Profitability

This table compares Zynga and Perfect World Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zynga -12.16% -5.25% -4.45%
Perfect World Co. 4.50% 3.99% 2.60%

Insider and Institutional Ownership

66.0% of Zynga shares are owned by institutional investors. 12.4% of Zynga shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Zynga beats Perfect World Co. on 5 of the 8 factors compared between the two stocks.

Zynga Company Profile

Zynga Inc. is a provider of social game services. The Company develops, markets and operates social games as live services played on mobile platforms, such as iPhone Operating System (iOS) operating system and Android operating system and social networking sites, such as Facebook. The Company has developed a range of social games, including games in its Slots, Words With Friends, Zynga Poker and FarmVille franchises. It operates its games as live services and updates them with new features. It analyzes the data generated by its players’ game play and social interactions to guide the creation of new content and features. The Company operates its games as live services that are available anytime and anywhere. The Company invests in game categories, including Social Casino, Casual, Action Strategy and Invest Express. Social Casino includes Zynga Poker and its Slots games, such as Hit It Rich! Slots, Wizard of Oz Slots, Willy Wonka and the Chocolate Factory Slots, and Black Diamond Casino.

Perfect World Co. Company Profile

Perfect World Co., Ltd. is a holding company. The Company, through its subsidiaries, develops and operates online games. It operates in two segments: PRC operations and International operations. The PRC operating segment includes PRC online game business. The International operating segment includes United States online game business, Runic Games and Unknown Worlds. Its portfolio of self-developed online games includes massively multiplayer online role playing games (MMORPGs): Perfect World, Legend of Martial Arts, Perfect World II, Zhu Xian, Chi Bi, Pocketpet Journey West, Battle of the Immortals, Fantasy Zhu Xian, Forsaken World, Empire of the Immortals, Return of the Condor Heroes and Legend of the Condor Heroes, among others. It also offers Web and mobile games, such as Return of the Condor Heroes, Forsaken World, CrossGate Mobile, Forever Mars, Dawn after Dark and Swordsman Mobile. It operates its games in North America, Europe, Japan, Korea and Southeast Asia.

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