Comparing Tencent (OTCMKTS:TCEHY) & KE (NYSE:BEKE)

Tencent (OTCMKTS:TCEHY) and KE (NYSE:BEKE) are both large-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Risk & Volatility

Tencent has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500. Comparatively, KE has a beta of -0.36, suggesting that its stock price is 136% less volatile than the S&P 500.

Earnings and Valuation

This table compares Tencent and KE”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent	$104.58 billion	5.02	$31.28 billion	$3.58	16.10
KE	$13.52 billion	1.32	$428.13 million	$0.42	37.99

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

Profitability

This table compares Tencent and KE’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%
KE	3.77%	5.47%	3.10%

Dividends

Tencent pays an annual dividend of $0.60 per share and has a dividend yield of 1.0%. KE pays an annual dividend of $0.23 per share and has a dividend yield of 1.4%. Tencent pays out 16.8% of its earnings in the form of a dividend. KE pays out 54.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider and Institutional Ownership

0.0% of Tencent shares are held by institutional investors. Comparatively, 39.3% of KE shares are held by institutional investors. 6.8% of KE shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Tencent and KE, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	2	2	0	2.50
KE	0	1	6	0	2.86

Tencent currently has a consensus target price of $106.00, indicating a potential upside of 83.93%. KE has a consensus target price of $23.07, indicating a potential upside of 44.57%. Given Tencent’s higher probable upside, equities analysts clearly believe Tencent is more favorable than KE.

Summary

Tencent beats KE on 10 of the 16 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 KE

KE Holdings Inc., through its subsidiaries, engages in operating an integrated online and offline platform for housing transactions and services in the People's Republic of China. It operates through four segments: Existing Home Transaction Services, New Home Transaction Services, Home Renovation and Furnishing, and Emerging and Other Services. The company operates Beike, an integrated online and offline platform for housing transactions and services; Lianjia, a real estate brokerage branded store; Agent Cooperation Network, an operating system that fosters reciprocity and bonding among various service providers; and software-as-a-service systems. It also owns the Deyou brand for connected brokerage stores; and other brands. In addition, the company offers contract, secure payment, escrow, and other services. KE Holdings Inc. was founded in 2001 and is headquartered in Beijing, the People's Republic of China.