Nextdoor (NYSE:NXDR) & Square Enix (OTCMKTS:SQNXF) Financial Analysis

Square Enix (OTCMKTS:SQNXF) and Nextdoor (NYSE:NXDR) are both communication services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Profitability

This table compares Square Enix and Nextdoor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Square Enix	N/A	N/A	N/A
Nextdoor	-11.08%	-6.16%	-5.45%

Insider and Institutional Ownership

35.7% of Nextdoor shares are held by institutional investors. 33.5% of Nextdoor shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Square Enix and Nextdoor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Square Enix	1	0	0	0	1.00
Nextdoor	1	2	1	0	2.00

Nextdoor has a consensus price target of $2.80, suggesting a potential upside of 15.70%. Given Nextdoor’s stronger consensus rating and higher probable upside, analysts plainly believe Nextdoor is more favorable than Square Enix.

Valuation & Earnings

This table compares Square Enix and Nextdoor”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Square Enix	$1.98 billion	3.32	$195.47 million	$0.75	24.29
Nextdoor	$274.60 million	3.36	-$54.20 million	($0.08)	-30.25

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

Volatility and Risk

Square Enix has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Nextdoor has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

About Square Enix

Square Enix Holdings Co., Ltd. operates in the content and service businesses in Japan and internationally. It operates through Digital Entertainment Business, Amusement Business, Publishing Business, and Rights Property Business. The company plans, develops, sells, and manages digital entertainment content primarily in the form of computer games. It is also involved in the operation of amusement facilities; and planning, development, manufacture, sale, and rental of arcade game machines and related products for amusement facilities. In addition, the company publishes and licenses comic books, magazines, game-related books, periodicals, etc. Further, it plans, produces, distributes, and licenses secondary works; and offers content under the SQUARE ENIX PRODUCTS brand; and stuffed toys and utility goods under the SQEX TOYS brand. The company was incorporated in 1975 and is headquartered in Tokyo, Japan.

About Nextdoor

Nextdoor Holdings, Inc. operates as the neighborhood network that connects neighbors, businesses, and public services in the United States and internationally. It enables small and mid-sized businesses, large brands, public agencies, and nonprofits to receive information, give and get help, and build connections. The company is headquartered in San Francisco, California.