Critical Contrast: Travelzoo (NASDAQ:TZOO) vs. Zhihu (NYSE:ZH)

Zhihu (NYSE:ZH) and Travelzoo (NASDAQ:TZOO) are both small-cap communication services companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Insider and Institutional Ownership

28.9% of Zhihu shares are owned by institutional investors. Comparatively, 27.4% of Travelzoo shares are owned by institutional investors. 13.6% of Zhihu shares are owned by company insiders. Comparatively, 45.3% of Travelzoo shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Zhihu has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500. Comparatively, Travelzoo has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Zhihu and Travelzoo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zhihu	1	0	0	0	1.00
Travelzoo	1	1	2	0	2.25

Travelzoo has a consensus price target of $13.83, suggesting a potential upside of 168.09%. Given Travelzoo’s stronger consensus rating and higher probable upside, analysts plainly believe Travelzoo is more favorable than Zhihu.

Earnings and Valuation

This table compares Zhihu and Travelzoo”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zhihu	$2.64 billion	0.10	-$27.58 million	($0.55)	-5.31
Travelzoo	$92.15 million	0.57	$4.70 million	($0.18)	-28.67

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

Profitability

This table compares Zhihu and Travelzoo’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%
Travelzoo	-1.82%	-9.35%	-3.52%

Summary

Travelzoo beats Zhihu on 10 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 Travelzoo

Travelzoo, together with its subsidiaries, operates as an Internet media company that provides travel, entertainment, and local experiences worldwide. It operates in four segments: Travelzoo North America, Travelzoo Europe, Jack's Flight Club, and New Initiatives. The company offers Travelzoo website, Travelzoo Top 20 email newsletters, Standalone email newsletters, Travelzoo Network, Travelzoo mobile applications, Jack's Flight Club website, Jack's Flight Club mobile applications, and Jack's Flight Club newsletters. The company's Travelzoo website and newsletters include local deals and getaways listings that allow members to purchase vouchers for offers from local businesses, such as spas, hotels, and restaurants; Jack's Flight Club, a subscription service that provides members with information about exceptional airfares; and Travelzoo Network, a network of third-party websites that list travel deals published by the company. It serves airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was incorporated in 1998 and is headquartered in New York, New York.