Financial Review: HUYA (NYSE:HUYA) and GRAVITY (NASDAQ:GRVY)

HUYA (NYSE:HUYA) and GRAVITY (NASDAQ:GRVY) are both small-cap communication services companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Valuation & Earnings

This table compares HUYA and GRAVITY”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HUYA	$929.83 million	0.50	-$16.10 million	($0.06)	-34.25
GRAVITY	$576.11 billion	0.00	$47.22 million	$8.15	8.75

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

Profitability

This table compares HUYA and GRAVITY’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HUYA	-1.59%	0.20%	0.14%
GRAVITY	14.92%	12.70%	10.85%

Dividends

HUYA pays an annual dividend of $0.12 per share and has a dividend yield of 5.8%. GRAVITY pays an annual dividend of $2.48 per share and has a dividend yield of 3.5%. HUYA pays out -200.0% of its earnings in the form of a dividend. GRAVITY pays out 30.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. HUYA is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current recommendations and price targets for HUYA and GRAVITY, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HUYA	1	1	1	1	2.50
GRAVITY	0	1	0	0	2.00

HUYA currently has a consensus price target of $3.45, suggesting a potential upside of 67.88%. Given HUYA’s stronger consensus rating and higher possible upside, equities analysts plainly believe HUYA is more favorable than GRAVITY.

Volatility & Risk

HUYA has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, GRAVITY has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Insider & Institutional Ownership

23.2% of HUYA shares are held by institutional investors. Comparatively, 9.9% of GRAVITY shares are held by institutional investors. 1.2% of HUYA shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

HUYA beats GRAVITY on 9 of the 17 factors compared between the two stocks.

About HUYA

HUYA Inc., together with its subsidiaries, operates game live streaming platforms in the People's Republic of China. Its platforms enable broadcasters and viewers to interact during live streaming. The company's live streaming content also covers other entertainment content, such as talent shows, anime, outdoor activities, live chats, and other genres. In addition, it operates Nimo TV, a game live streaming platform in international markets. Further, the company provides online advertising, cnt, internet value added, and cultural and creative services. The company was founded in 2014 and is headquartered in Guangzhou, China. HUYA Inc. is a subsidiary of Tencent Holdings Limited.

About GRAVITY

Gravity Co., Ltd. develops and publishes online and mobile games worldwide. It offers a massively multiplayer online role-playing game, including Ragnarok Online, Dragonica, Ragnarok Online II, and Ragnarok Landverse. Its mobile games portfolio includes Ragnarok M; Eternal Love; Ragnarok Origin; Ragnarok X: Next Generation; Ragnarok Arena; WITH ISLAND; the Labyrinth of Ragnarok; Ragnarok Poring Merge; Tera Classic; Ragnarok: The Lost Memories; Sadako M; NBA: Rise To Stardom; Milkmaid Of The Milky Way; Generation Zombie; Ragnarok Idle Adventure; Ragnarok 20 Heroes; White Chord; WITH: Whale In The High; Ragnarok Lost Memories; and Paladog Tactics. It also provides console games, such as Ragnarok DS for Nintendo DS; Ragnarok: The Princess of Light and Darkness for PlayStation Portable; Ragnarok Odyssey for PlayStation Vita; Double Dragon II for Xbox 360; Ragnarok Odyssey Ace for PlayStation Vita and PlayStation 3; Pigromance for Steam, Stove, Nintendo Switch, Xbox One, Xbox Series X|S; ALTF4 11 for Steam and Stove; Wetory for Steam, Stove, Nintedo Switch; and GRANDIA HD Collection for Nintendo Switch. In addition, it offers games for IPTV, including Haunted House and Pororo: The Little Penguin, and Kongsuni; and markets dolls, stationery, food, and other character based merchandises, as well as game manuals, monthly magazines, and other publications; PC games, including Puzzle Platformer, ALTF42, Ragnarok ZERO, KAMiBAKO-Mythology of Cube, Psychodemic, and FINAL KNIGHT; social network games and mobile games, such as Ragnarok V: Returns, Ragnarok: The Lost Memories and Ragnrok Begins in-house; and web-browser-based games, such as Ragnarok Prequel and Ragnarok Prequel II. Further, the company provides system development and maintenance services, as well as system integration services to third parties. The company was incorporated in 2000 and is headquartered in Seoul, South Korea. Gravity Co., Ltd. is a subsidiary of GungHo Online Entertainment, Inc.