Head-To-Head Contrast: iQIYI (NASDAQ:IQ) versus TrueCar (NASDAQ:TRUE)

iQIYI (NASDAQ:IQ) and TrueCar (NASDAQ:TRUE) are both small-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Insider and Institutional Ownership

52.7% of iQIYI shares are owned by institutional investors. Comparatively, 79.4% of TrueCar shares are owned by institutional investors. 57.8% of iQIYI shares are owned by insiders. Comparatively, 3.9% of TrueCar shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for iQIYI and TrueCar, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
iQIYI	1	1	2	0	2.25
TrueCar	1	5	0	0	1.83

iQIYI currently has a consensus target price of $2.55, suggesting a potential upside of 111.34%. TrueCar has a consensus target price of $2.55, suggesting a potential upside of 0.39%. Given iQIYI’s stronger consensus rating and higher possible upside, equities analysts plainly believe iQIYI is more favorable than TrueCar.

Valuation & Earnings

This table compares iQIYI and TrueCar”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
iQIYI	$3.80 billion	0.31	-$29.50 million	($0.03)	-40.17
TrueCar	$181.22 million	1.25	-$31.05 million	($0.22)	-11.55

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

Volatility and Risk

iQIYI has a beta of 0.19, suggesting that its share price is 81% less volatile than the S&P 500. Comparatively, TrueCar has a beta of 2.22, suggesting that its share price is 122% more volatile than the S&P 500.

Profitability

This table compares iQIYI and TrueCar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
iQIYI	-0.76%	-0.93%	-0.27%
TrueCar	-10.27%	-23.76%	-18.02%

Summary

iQIYI beats TrueCar on 10 of the 14 factors compared between the two stocks.

About iQIYI

iQIYI, Inc., together with its subsidiaries, provides online entertainment video services in the People's Republic of China. It offers various products and services, including online video, online games, online literature, animations, and other products. The company operates a platform that provides a collection of internet video content, such as professionally produced content licensed from professional content providers and self-produced content. It also offers membership, online advertising, content distribution, and live broadcasting services. In addition, the company operates iQIYI Show, a live broadcasting platform that enables users to follow their favorite hosts and shows in real time through live broadcasting; and iQIYI Lite that offers an easy and quick access to the personalized videos based on their user preferences. Further, it is involved in the talent agency and IP licensing activities, as well as engages in developing a video community app. The company was formerly known as Qiyi.com, Inc. and changed its name to iQIYI, Inc. in November 2017. iQIYI, Inc. was incorporated in 2009 and is headquartered in Beijing, China. iQIYI, Inc. is a subsidiary of Baidu, Inc.

About TrueCar

TrueCar, Inc. operates as an internet-based information, technology, and communication services company in the United States. It operates its platform on the TrueCar website and mobile applications. Its platform enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar certified dealers. The company also offers forecast and consulting services regarding determination of the residual value of an automobile at given future points in time, which are used to underwrite automotive loans and leases, and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. In addition, it provides TrueCar Trade, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership; and DealerScience that provides dealers with advanced digital retailing software tools. The company was formerly known as Zag.com Inc. The company was incorporated in 2005 and is headquartered in Santa Monica, California.