Leaf Group (NASDAQ: LFGR) and 58.com (NYSE:WUBA) are both technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Institutional & Insider Ownership

60.0% of 58.com shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for Leaf Group and 58.com, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Leaf Group 0 1 4 0 2.80
58.com 3 4 6 0 2.23

Leaf Group presently has a consensus target price of $10.30, suggesting a potential upside of 38.26%. 58.com has a consensus target price of $53.10, suggesting a potential downside of 18.71%. Given Leaf Group’s stronger consensus rating and higher probable upside, analysts clearly believe Leaf Group is more favorable than 58.com.

Valuation and Earnings

This table compares Leaf Group and 58.com’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Leaf Group $117.85 million 1.29 -$21.14 million N/A N/A
58.com $1.33 billion 7.15 $230.09 million $0.17 384.24

58.com has higher revenue and earnings than Leaf Group.

Profitability

This table compares Leaf Group and 58.com’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Leaf Group -31.38% -52.73% -41.29%
58.com 2.14% 1.04% 0.72%

Summary

58.com beats Leaf Group on 8 of the 10 factors compared between the two stocks.

Leaf Group Company Profile

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.

58.com Company Profile

58.com Inc. is a holding company. The Company’s business consists of its online classifieds and listing platforms. Its online classifieds and listings platforms enable local merchants and consumers to connect, share information and conduct business in China. These platforms include 58, Ganji and Anjuke. 58 and Ganji are online multi-content category-classified advertising platforms, while Anjuke is an online real estate listing platform. In addition, 58 Daojia Inc., its subsidiary, operates a mobile-based closed-loop transactional platform for home services, which directly connects consumers and individual service providers for local services, such as home cleaning, moving services and manicure services provided at home. Its classifieds and listing platforms contain local information for over 480 cities across various content categories, including jobs, real estate, used goods, automotive and yellow pages. It also offers membership, online marketing services and e-commerce services.

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