Critical Analysis: Duolingo (NASDAQ:DUOL) and Coursera (NYSE:COUR)

Duolingo (NASDAQ:DUOL) and Coursera (NYSE:COUR) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Earnings and Valuation

This table compares Duolingo and Coursera”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Duolingo	$1.04 billion	6.66	$414.07 million	$8.44	17.50
Coursera	$757.50 million	1.79	-$51.00 million	($0.67)	-7.66

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

Profitability

This table compares Duolingo and Coursera’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Duolingo	35.88%	12.10%	8.24%
Coursera	-15.39%	-1.72%	-1.07%

Risk and Volatility

Duolingo has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500. Comparatively, Coursera has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Duolingo and Coursera, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Duolingo	1	14	8	1	2.38
Coursera	1	4	7	0	2.50

Duolingo presently has a consensus target price of $124.38, indicating a potential downside of 15.80%. Coursera has a consensus target price of $8.55, indicating a potential upside of 66.42%. Given Coursera’s stronger consensus rating and higher possible upside, analysts plainly believe Coursera is more favorable than Duolingo.

Insider and Institutional Ownership

91.6% of Duolingo shares are owned by institutional investors. Comparatively, 89.5% of Coursera shares are owned by institutional investors. 16.6% of Duolingo shares are owned by company insiders. Comparatively, 16.3% of Coursera shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Duolingo beats Coursera on 12 of the 15 factors compared between the two stocks.

About Duolingo

Duolingo, Inc. operates as a mobile learning platform in the United States, the United Kingdom, and internationally. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. It also provides a digital English language proficiency assessment exam. Duolingo, Inc. was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.

About Coursera

Coursera, Inc. operates an online educational content platform in the United States, Europe, Africa, the Asia Pacific, the Middle East, and internationally. It operates in three segments: Consumer, Enterprise, and Degrees. The company offers guided projects, courses, and specializations, as well as online degrees; and certificates for entry-level professional, non-entry level professional, university, and MasterTrack. It offers its products to individuals, enterprise, business, campus, and government. The company was formerly known as Dkandu, Inc. and changed its name to Coursera, Inc. in April 2012. Coursera, Inc. was incorporated in 2011 and is headquartered in Mountain View, California.