Hello Group (NASDAQ:MOMO – Get Free Report) and Tencent (OTCMKTS:TCEHY – Get Free Report) are both communication services companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, risk and valuation.
Volatility & Risk
Hello Group has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, Tencent has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500.
Profitability
This table compares Hello Group and Tencent’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Hello Group | 11.02% | 10.43% | 8.41% |
| Tencent | 29.83% | 19.98% | 12.03% |
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Hello Group | 1 | 1 | 1 | 0 | 2.00 |
| Tencent | 1 | 1 | 2 | 0 | 2.25 |
Hello Group presently has a consensus target price of $9.05, indicating a potential upside of 81.91%. Tencent has a consensus target price of $106.00, indicating a potential upside of 93.08%. Given Tencent’s stronger consensus rating and higher possible upside, analysts plainly believe Tencent is more favorable than Hello Group.
Insider & Institutional Ownership
51.0% of Hello Group shares are held by institutional investors. Comparatively, 0.0% of Tencent shares are held by institutional investors. 61.4% of Hello Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Hello Group and Tencent”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Hello Group | $10.10 billion | 0.05 | $114.97 million | $0.98 | 5.08 |
| Tencent | $104.58 billion | 4.78 | $31.28 billion | $3.65 | 15.04 |
Tencent has higher revenue and earnings than Hello Group. Hello Group is trading at a lower price-to-earnings ratio than Tencent, indicating that it is currently the more affordable of the two stocks.
Summary
Tencent beats Hello Group on 11 of the 14 factors compared between the two stocks.
About Hello Group
Hello Group Inc. provides mobile-based social and entertainment services in the People's Republic of China. It operates in three segments: Momo, Tantan, and QOOL. The company offers Momo, a mobile application that connects people and facilitates social interactions based on location, interests, and various online recreational activities, including live talent shows, short videos, social games, as well as other video- and audio-based interactive experiences, such as online parties, mobile karaoke and user participated reality shows; Tantan, a social and dating application; and other applications under the Hertz, Soulchill, Duidui, and Tietie names. The company also provides livestream services for various content and activities comprising talent shows, such as singing, dancing, and talk shows, as well as casual chatting, and other forms of interactions between broadcasters and viewers; value-added services; advertising and marketing services; and mobile games. The company was formerly known as Momo Inc. and changed its name to Hello Group Inc. in August 2021. Hello Group Inc. was incorporated in 2011 and is headquartered in Beijing, the People's Republic of China.
About Tencent
Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.
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