Financial Review: Cheetah Mobile (CMCM) & GrubHub (GRUB)

Cheetah Mobile (NYSE: CMCM) and GrubHub (NYSE:GRUB) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, analyst recommendations, valuation and institutional ownership.

Earnings and Valuation

This table compares Cheetah Mobile and GrubHub’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cheetah Mobile $657.45 million 2.42 -$11.59 million $0.36 30.75
GrubHub $493.33 million 12.70 $49.55 million $0.68 106.33

GrubHub has lower revenue, but higher earnings than Cheetah Mobile. Cheetah Mobile is trading at a lower price-to-earnings ratio than GrubHub, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for Cheetah Mobile and GrubHub, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cheetah Mobile 0 3 0 0 2.00
GrubHub 1 9 13 0 2.52

Cheetah Mobile currently has a consensus price target of $11.67, indicating a potential upside of 5.39%. GrubHub has a consensus price target of $59.52, indicating a potential downside of 17.67%. Given Cheetah Mobile’s higher possible upside, research analysts plainly believe Cheetah Mobile is more favorable than GrubHub.

Volatility and Risk

Cheetah Mobile has a beta of 3.24, meaning that its share price is 224% more volatile than the S&P 500. Comparatively, GrubHub has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500.

Profitability

This table compares Cheetah Mobile and GrubHub’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cheetah Mobile 7.44% 10.76% 6.35%
GrubHub 9.60% 7.45% 6.07%

Institutional and Insider Ownership

7.2% of Cheetah Mobile shares are owned by institutional investors. 17.1% of Cheetah Mobile shares are owned by company insiders. Comparatively, 2.4% of GrubHub shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

About Cheetah Mobile

Cheetah Mobile Inc. is a holding company. The Company and its consolidated subsidiaries, variable interest entities (VIEs) and a VIE’s subsidiary are engaged in the provision of online marketing services, Internet value-added services, and Internet security services and others. The Company operates a platform that offers mobile and personal computer (PC) applications for its users and global content promotional channels for its customers, both of which are powered by its cloud-based data analytics engines. For its users, its diversified suite of applications optimizes mobile and PC Internet system performance, and provides real time protection against known and unknown security threats. Its data analytics engines perform real time analysis of mobile applications, program files and Websites on their devices for behavior that may impair system performance or impose security risks.

About GrubHub

Grubhub Inc. provides an online and mobile platform for restaurant pick-up and delivery orders. Its products include Grubhub and Seamless Mobile Applications and Mobile Website, Grubhub and Seamless Websites, Corporate Program, Delivery, Allmenus and MenuPages, Grubhub for Restaurants, and Restaurant Websites. As of December 31, 2016, the Company connected more than 50,000 local restaurants with diners in more than 1,100 cities across the United States. In certain markets, the Company also provides delivery services to restaurants on its platform that do not have their own delivery operations. The Company provides diners on the platform with a personalized platform that helps them search for local restaurants and then place an order from an Internet-connected device. It also provides diners with information about their orders and status. The Company also provides delivery services to restaurants on its platform that do not have their own delivery operations.

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