Critical Analysis: Paramount Skydance (NASDAQ:PSKY) & NetEase (NASDAQ:NTES)

Paramount Skydance (NASDAQ:PSKY) and NetEase (NASDAQ:NTES) are both large-cap communication services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Insider and Institutional Ownership

73.0% of Paramount Skydance shares are held by institutional investors. Comparatively, 11.1% of NetEase shares are held by institutional investors. 0.4% of Paramount Skydance shares are held by company insiders. Comparatively, 54.7% of NetEase shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Paramount Skydance has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, NetEase has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Paramount Skydance and NetEase, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Skydance	8	5	2	0	1.60
NetEase	0	3	7	0	2.70

Paramount Skydance presently has a consensus price target of $11.38, indicating a potential upside of 13.01%. NetEase has a consensus price target of $158.38, indicating a potential upside of 26.89%. Given NetEase’s stronger consensus rating and higher probable upside, analysts plainly believe NetEase is more favorable than Paramount Skydance.

Dividends

Paramount Skydance pays an annual dividend of $0.20 per share and has a dividend yield of 2.0%. NetEase pays an annual dividend of $2.87 per share and has a dividend yield of 2.3%. Paramount Skydance pays out 69.0% of its earnings in the form of a dividend. NetEase pays out 38.1% 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. NetEase is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Paramount Skydance and NetEase”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paramount Skydance	$28.89 billion	0.39	-$621.00 million	$0.29	34.74
NetEase	$16.11 billion	4.96	$4.83 billion	$7.53	16.58

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

Profitability

This table compares Paramount Skydance and NetEase’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paramount Skydance	-2.13%	4.11%	1.21%
NetEase	29.85%	21.04%	15.59%

Summary

NetEase beats Paramount Skydance on 12 of the 16 factors compared between the two stocks.

About Paramount Skydance

Paramount Global is a media and entertainment company which creates premium content and experiences for audiences. The company’s portfolio of consumer brands includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount , Pluto TV and Simon & Schuster, among others. Paramount Global, formerly known as ViacomCBS Inc., is based in NEW YORK.

About NetEase

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally . The company operates through Games and Related Value-Added Services, Youdao, Cloud Music, and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, Youdao Listening Pod, Youdao Smart Light, Youdao Pocket Translator, and Youdao Super Dictionary; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services also include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.