Sohu.com (NASDAQ: SOHU) and Activision Blizzard (NASDAQ:ATVI) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitabiliy, analyst recommendations, institutional ownership and dividends.

Institutional & Insider Ownership

63.1% of Sohu.com shares are held by institutional investors. Comparatively, 87.5% of Activision Blizzard shares are held by institutional investors. 21.0% of Sohu.com shares are held by insiders. Comparatively, 2.1% of Activision Blizzard shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Sohu.com and Activision Blizzard’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sohu.com -16.83% -17.02% -10.43%
Activision Blizzard 24.68% 18.42% 9.94%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Sohu.com and Activision Blizzard, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sohu.com 1 3 1 0 2.00
Activision Blizzard 1 3 19 0 2.78

Sohu.com presently has a consensus price target of $50.10, suggesting a potential upside of 7.30%. Activision Blizzard has a consensus price target of $60.10, suggesting a potential downside of 1.37%. Given Sohu.com’s higher probable upside, equities analysts clearly believe Sohu.com is more favorable than Activision Blizzard.

Earnings and Valuation

This table compares Sohu.com and Activision Blizzard’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sohu.com $1.62 billion 1.12 $34.28 million ($7.06) -6.61
Activision Blizzard $6.88 billion 6.67 $2.26 billion $1.32 46.16

Activision Blizzard has higher revenue and earnings than Sohu.com. Sohu.com is trading at a lower price-to-earnings ratio than Activision Blizzard, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Sohu.com has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500. Comparatively, Activision Blizzard has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Dividends

Activision Blizzard pays an annual dividend of $0.30 per share and has a dividend yield of 0.5%. Sohu.com does not pay a dividend. Activision Blizzard pays out 22.7% of its earnings in the form of a dividend.

Summary

Activision Blizzard beats Sohu.com on 11 of the 15 factors compared between the two stocks.

About Sohu.com

Sohu.com Inc. (Sohu) is an online media, search and game service company, which is engaged in providing online products and services on personal computers (PCs) and mobile devices in the People’s Republic of China (the PRC). The Company operates through three segments: the Sohu segment; the Sogou segment, and the Changyou segment. The Sohu segment’s business is the brand advertising business, which offers to users, over its matrices of Chinese language online media, various content, products and services across multiple Internet-enabled devices, such as PCs, mobile phones and tablets. The search and search-related business primarily offers advertisers pay-for-click services, as well as online marketing services on Web directories operated by Sogou. Changyou’s business lines consist of the online game business; the platform channel business, which consists primarily of online advertising and also includes Internet value-added services (IVAS), and the cinema advertising business.

About Activision Blizzard

Activision Blizzard, Inc. is a developer and publisher of interactive entertainment content and services. The Company develops and distributes content and services across various gaming platforms, including video game consoles, personal computers (PC) and mobile devices. Its segments include Activision Publishing, Inc. (Activision), Blizzard Entertainment, Inc. (Blizzard), King Digital Entertainment (King) and Other. Activision is a developer and publisher of interactive software products and content. Blizzard is engaged in developing and publishing of interactive software products and entertainment content, particularly in PC gaming. King is a mobile entertainment company. It is engaged in other businesses, including The Major League Gaming (MLG) business; The Activision Blizzard Studios (Studios) business, and The Activision Blizzard Distribution (Distribution) business. It also develops products spanning other genres, including action/adventure, role-playing and simulation.

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