Critical Comparison: The9 (NCTY) and The Competition

The9 (NASDAQ:NCTY) is one of 957 public companies in the “Software” industry, but how does it contrast to its peers? We will compare The9 to similar businesses based on the strength of its risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Volatility & Risk

The9 has a beta of 2.01, indicating that its share price is 101% more volatile than the S&P 500. Comparatively, The9’s peers have a beta of 1.26, indicating that their average share price is 26% more volatile than the S&P 500.

Earnings & Valuation

This table compares The9 and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
The9	$15.43 million	-$57.55 million	0.55
The9 Competitors	$1.80 billion	$385.16 million	110.71

The9’s peers have higher revenue and earnings than The9. The9 is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

0.5% of The9 shares are held by institutional investors. Comparatively, 42.2% of shares of all “Software” companies are held by institutional investors. 30.8% of The9 shares are held by company insiders. Comparatively, 19.8% of shares of all “Software” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for The9 and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The9	1	0	0	0	1.00
The9 Competitors	5616	21240	44336	1469	2.57

As a group, “Software” companies have a potential upside of 331.19%. Given The9’s peers stronger consensus rating and higher probable upside, analysts plainly believe The9 has less favorable growth aspects than its peers.

Profitability

This table compares The9 and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The9	N/A	N/A	N/A
The9 Competitors	-629.58%	17.55%	-9.11%

Summary

The9 peers beat The9 on 9 of the 13 factors compared.

The9 Company Profile

The9 Limited operates as a cryptocurrency mining business in China, Eastern Europe, Asia, and North America. The company was formerly known as GameNow.net Limited and changed its name to The9 Limited in February 2004. The9 Limited was incorporated in 1999 and is headquartered in Shanghai, the People’s Republic of China.