Analyzing Sohu.com (NASDAQ:SOHU) & K Wave Media (NASDAQ:KWM)

K Wave Media (NASDAQ:KWM) and Sohu.com (NASDAQ:SOHU) are both small-cap communication services companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Institutional & Insider Ownership

62.2% of K Wave Media shares are held by institutional investors. Comparatively, 33.0% of Sohu.com shares are held by institutional investors. 65.1% of K Wave Media shares are held by company insiders. Comparatively, 21.1% of Sohu.com shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares K Wave Media and Sohu.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
K Wave Media	N/A	N/A	N/A
Sohu.com	38.15%	21.63%	16.13%

Earnings & Valuation

This table compares K Wave Media and Sohu.com”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
K Wave Media	$54.95 million	0.06	N/A	N/A	N/A
Sohu.com	$584.33 million	0.64	$394.10 million	$8.57	1.67

Sohu.com has higher revenue and earnings than K Wave Media.

Analyst Recommendations

This is a summary of recent ratings and target prices for K Wave Media and Sohu.com, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
K Wave Media	1	0	0	0	1.00
Sohu.com	0	1	2	0	2.67

Sohu.com has a consensus target price of $19.00, suggesting a potential upside of 33.05%. Given Sohu.com’s stronger consensus rating and higher probable upside, analysts plainly believe Sohu.com is more favorable than K Wave Media.

Volatility & Risk

K Wave Media has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Sohu.com has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

Summary

Sohu.com beats K Wave Media on 8 of the 11 factors compared between the two stocks.

About K Wave Media

K Wave Media engaged in the entertainment content and IP creation businesses. K Wave Media, formerly known as Global Star Acquisition Inc., is based in NEW YORK.

About Sohu.com

Sohu.com Limited engages in the provision of online media, video, and game products and services on personal computers (PCs) and mobile devices in China. It operates through two segments: Sohu and Changyou. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, as well as ifox, a video application for PC. It also operates Focus (www.focus.cn), which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. In addition, the company offers interactive online games for PCs and mobile devices. Further, it provides paid subscription and interactive broadcasting services. The company was incorporated in 1996 and is headquartered in Beijing, China.