Zynga (NASDAQ: ZNGA) and Shanda Games Limited (NASDAQ:GAME) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, risk, valuation and profitability.

Earnings & Valuation

This table compares Zynga and Shanda Games Limited’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zynga $776.48 million 4.03 -$55.57 million ($0.09) -40.22
Shanda Games Limited N/A N/A N/A N/A N/A

Shanda Games Limited has higher revenue, but lower earnings than Zynga.

Profitability

This table compares Zynga and Shanda Games Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zynga -10.50% -3.83% -3.23%
Shanda Games Limited 18.49% 32.56% 15.63%

Analyst Ratings

This is a breakdown of current recommendations for Zynga and Shanda Games Limited, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zynga 0 4 8 0 2.67
Shanda Games Limited 0 0 0 0 N/A

Zynga presently has a consensus target price of $4.04, indicating a potential upside of 11.50%. Given Zynga’s higher probable upside, equities research analysts plainly believe Zynga is more favorable than Shanda Games Limited.

Insider & Institutional Ownership

68.4% of Zynga shares are held by institutional investors. 12.4% of Zynga shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Zynga beats Shanda Games Limited on 5 of the 8 factors compared between the two stocks.

About Zynga

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.

About Shanda Games Limited

Shanda Games Limited (Shanda Games) is engaged in the development, operation, and publishing of online games, including both multi-player online role-playing games (MMORPGs or MMO games) and mobile games, as well as related businesses, principally in the People’s Republic of China (the PRC) and also in various other countries. The Company develops and sources an array of game content through multiple channels, including in-house development, licensing, investment, acquisition, joint development and joint operation. Through these channels, it has built a diversified game portfolio and a robust game pipeline. It operates approximately 35 MMO games and approximately 29 mobile games in China and certain overseas markets. Its games include Mir II, BNB, Woool, The Age, Maple Story, Latale, Fengyun Online, A Thousand Years III, AION, Luvinia Online, Dragon Nest, Legend of Immortals, Mir III, Million Arthur, Chain Chronicle, LoveLive!, Iron Knights, Bloodline and Final Fantasy XIV.

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