Critical Comparison: Teads (NASDAQ:TEAD) vs. Zhihu (NYSE:ZH)

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

Risk and Volatility

Teads has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500. Comparatively, Zhihu has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Teads and Zhihu, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Teads	1	2	1	0	2.00
Zhihu	1	0	0	0	1.00

Teads currently has a consensus target price of $1.00, indicating a potential upside of 100.80%. Given Teads’ stronger consensus rating and higher probable upside, research analysts plainly believe Teads is more favorable than Zhihu.

Institutional and Insider Ownership

60.4% of Teads shares are owned by institutional investors. Comparatively, 28.9% of Zhihu shares are owned by institutional investors. 12.0% of Teads shares are owned by insiders. Comparatively, 13.6% of Zhihu shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Teads and Zhihu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Teads	-43.32%	-49.37%	-6.14%
Zhihu	-11.33%	-7.71%	-5.75%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Teads	$1.30 billion	0.04	-$517.07 million	($5.53)	-0.09
Zhihu	$393.10 million	0.75	-$27.58 million	($0.55)	-6.23

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

About Teads

Outbrain Inc., together with its subsidiaries, operates an online content recommendation platform worldwide. It offers Outbrain Engage, a product suite for media partners that provides personalized feeds and data-driven recommendations, as well as a solution to maximize user engagement. The company’s Outbrain Engage solution also includes a web-based dashboard to manage and control various aspects of the platform, including content, formats, sources, frequency, and categories of ads delivered on their properties, as well as monetizes the content through customized data-driven advertising. It also provides Outbrain Amplify, a product suite for advertisers that provides an open web platform that helps users to connect with audiences on premium digital properties. The company’s Outbrain Amplify solution also provides advertisers with access to ad inventory that support various formats, including text and image, video, interactive carousel, app install, and other forms of direct response; and ads optimized for engagement. Outbrain Inc. was incorporated in 2006 and is headquartered in New York, New York.

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.