Critical Contrast: Dropbox (NASDAQ:DBX) vs. Sohu.com (NASDAQ:SOHU)

Sohu.com (NASDAQ:SOHU) and Dropbox (NASDAQ:DBX) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, risk and valuation.

Profitability

This table compares Sohu.com and Dropbox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sohu.com	67.44%	20.67%	13.84%
Dropbox	20.17%	-37.47%	18.80%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sohu.com and Dropbox, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sohu.com	0	1	2	0	2.67
Dropbox	1	3	1	0	2.00

Sohu.com presently has a consensus price target of $20.00, suggesting a potential upside of 24.22%. Dropbox has a consensus price target of $27.50, suggesting a potential upside of 6.80%. Given Sohu.com’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Sohu.com is more favorable than Dropbox.

Institutional & Insider Ownership

33.0% of Sohu.com shares are held by institutional investors. Comparatively, 94.8% of Dropbox shares are held by institutional investors. 21.1% of Sohu.com shares are held by insiders. Comparatively, 30.0% of Dropbox shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Sohu.com and Dropbox”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sohu.com	$584.33 million	0.83	$394.10 million	$14.08	1.14
Dropbox	$2.52 billion	2.46	$508.40 million	$1.86	13.84

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

Risk & Volatility

Sohu.com has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, Dropbox has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Summary

Dropbox beats Sohu.com on 8 of the 14 factors compared between the two stocks.

About Sohu.com

Sohu.com Limited engages in the provision of online media, video, and game products and services on personal computers (PCs) and mobile devices in China. It operates through two segments: Sohu and Changyou. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, as well as ifox, a video application for PC. It also operates Focus (www.focus.cn), which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. In addition, the company offers interactive online games for PCs and mobile devices. Further, it provides paid subscription and interactive broadcasting services. The company was incorporated in 1996 and is headquartered in Beijing, China.

About Dropbox

Dropbox, Inc. provides a content collaboration platform worldwide. The company's platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was incorporated in 2007 and is headquartered in San Francisco, California.