Reviewing Tencent (OTCMKTS:TCEHY) & GigaMedia (NASDAQ:GIGM)

Tencent (OTCMKTS:TCEHY) and GigaMedia (NASDAQ:GIGM) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, institutional ownership, dividends and analyst recommendations.

Valuation and Earnings

This table compares Tencent and GigaMedia”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent	$104.58 billion	4.76	$31.28 billion	$3.58	15.25
GigaMedia	$3.47 million	4.65	-$1.55 million	($0.15)	-9.73

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

Analyst Ratings

This is a summary of current ratings for Tencent and GigaMedia, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	2	2	0	2.50
GigaMedia	1	0	0	0	1.00

Tencent currently has a consensus price target of $106.00, indicating a potential upside of 94.14%. Given Tencent’s stronger consensus rating and higher probable upside, research analysts plainly believe Tencent is more favorable than GigaMedia.

Profitability

This table compares Tencent and GigaMedia’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent	30.60%	19.52%	11.80%
GigaMedia	-50.86%	-4.52%	-4.24%

Insider and Institutional Ownership

0.0% of Tencent shares are held by institutional investors. Comparatively, 13.5% of GigaMedia shares are held by institutional investors. 1.0% of GigaMedia shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Tencent has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500. Comparatively, GigaMedia has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Summary

Tencent beats GigaMedia on 11 of the 14 factors compared between the two stocks.

About Tencent

Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.

About GigaMedia

GigaMedia Limited, together with its subsidiaries, provides digital entertainment services in Taiwan, Hong Kong, and Macau. The company owns and operates FunTown, a digital entertainment portal that offers mobile and browser-based casual games, as well as provides services such as player clubs, tournaments, avatars, friends and family messenger and online chatting systems, customer service, mobile platform, and customer platform. It also offers MahJong, a traditional Chinese tile-based game; casual card and table games; online card games; and chance-based games, including bingo, lotto, horse racing, Sic-Bo, slots, and other casual games. In addition, the company provides role-playing and sports games, such as Tales Runner, a multi-player online obstacle running game; Yume 100, a story-based game that targets female players; Akaseka, a female-oriented game; and Shinobi Master New Link, a male-oriented game. GigaMedia Limited was founded in 1998 and is headquartered in Taipei, Taiwan.