Reviewing Gaotu Techedu (NYSE:GOTU) & OneSpaWorld (NASDAQ:OSW)

Gaotu Techedu (NYSE:GOTU) and OneSpaWorld (NASDAQ:OSW) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitability.

Profitability

This table compares Gaotu Techedu and OneSpaWorld’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gaotu Techedu	-5.00%	-26.89%	-5.73%
OneSpaWorld	8.02%	18.36%	14.28%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Gaotu Techedu and OneSpaWorld, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gaotu Techedu	1	0	0	0	1.00
OneSpaWorld	0	1	5	0	2.83

OneSpaWorld has a consensus target price of $31.25, indicating a potential upside of 30.26%. Given OneSpaWorld’s stronger consensus rating and higher probable upside, analysts clearly believe OneSpaWorld is more favorable than Gaotu Techedu.

Insider and Institutional Ownership

48.4% of Gaotu Techedu shares are owned by institutional investors. Comparatively, 96.0% of OneSpaWorld shares are owned by institutional investors. 44.9% of Gaotu Techedu shares are owned by company insiders. Comparatively, 3.6% of OneSpaWorld shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Gaotu Techedu and OneSpaWorld”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gaotu Techedu	$878.98 million	0.71	-$46.23 million	($0.21)	-12.45
OneSpaWorld	$961.00 million	2.53	$71.62 million	$0.79	30.37

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

Risk and Volatility

Gaotu Techedu has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, OneSpaWorld has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Summary

OneSpaWorld beats Gaotu Techedu on 13 of the 14 factors compared between the two stocks.

About Gaotu Techedu

Gaotu Techedu Inc., a technology-driven education company, provides learning services, educational content, and digitalized learning products in the People's Republic of China. The company offers traditional online academic subject tutoring services that covers academic subjects, such as mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science for students; non-academic tutoring services; personal interest courses comprising chess learning, family relationships and education, humanities, and science courses; and professional courses primarily for college students and adults preparing for professional qualification exams, such as teacher's qualification, Chartered Financial Analyst designation, Certified Public Accountant designation, and other exams. It also offers admission courses for admission tests and interviews, including national-post graduate entrance examination, civil service examinations, and others; foreign language courses; overseas study related services; and courses to prepare and pass certain language exams for study abroad, such as IELTS and TOEFL. In addition, the company designs and develops course outlines, interactive courseware, practice exercises, and lesson notes; publishes reference books comprising Chinese dictionary, dictionary of idioms, and past exam questions for the college entrance examination; and develops, expands, and upgrades education-centric digital products and solutions, as well as learning apps. Further, it offers books and digitalized auxiliary learning tools, such as smart devices and translation pens; and online tutoring services. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, China.

About OneSpaWorld

OneSpaWorld Holdings Limited operates health and wellness centers onboard cruise ships and at destination resorts worldwide. Its health and wellness centers offer services, such as traditional body, salon, and skin care services and products; self-service fitness facilities, specialized fitness classes, and personal fitness training; pain management, detoxifying programs, and body composition analyses; weight management programs and products; and medi-spa services. The company also provides its guests access to beauty and wellness brands, including ELEMIS, Grown Alchemist, Kérastase, Dysport, Restylane, Thermage, CoolSculpting, truSculpt 3D, truSculpt iD, Good Feet, and Hyperice with various brands offered in the cruise market. The company is based in Nassau, Bahamas.