Analyzing Pinterest (NYSE:PINS) and Zhihu (NYSE:ZH)

Zhihu (NYSE:ZH) and Pinterest (NYSE:PINS) are both communication services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Zhihu and Pinterest, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zhihu	1	0	0	0	1.00
Pinterest	0	19	18	0	2.49

Pinterest has a consensus price target of $27.90, suggesting a potential upside of 36.43%. Given Pinterest’s stronger consensus rating and higher possible upside, analysts plainly believe Pinterest is more favorable than Zhihu.

Risk and Volatility

Zhihu has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500. Comparatively, Pinterest has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Profitability

This table compares Zhihu and Pinterest’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zhihu	-11.33%	-7.71%	-5.75%
Pinterest	5.46%	7.49%	5.62%

Valuation & Earnings

This table compares Zhihu and Pinterest”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zhihu	$393.10 million	0.57	-$27.58 million	($0.55)	-4.70
Pinterest	$4.56 billion	2.51	$416.86 million	$0.34	60.15

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

Insider & Institutional Ownership

28.9% of Zhihu shares are held by institutional investors. Comparatively, 88.8% of Pinterest shares are held by institutional investors. 13.6% of Zhihu shares are held by insiders. Comparatively, 8.1% of Pinterest shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Pinterest beats Zhihu on 13 of the 14 factors compared between the two stocks.

About Zhihu

Zhihu Inc. operates an online content community in the People’s Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People’s Republic of China.

About Pinterest

Pinterest, Inc. operates as a visual search and discovery platform in the United States and internationally. Its platform allows people to find ideas, such as recipes, home and style inspiration, and others; and to search, save, and shop the ideas. The company was formerly known as Cold Brew Labs Inc. and changed its name to Pinterest, Inc. in April 2012. Pinterest, Inc. was incorporated in 2008 and is headquartered in San Francisco, California.