The9 (NASDAQ:NCTY) versus Yelp (NYSE:YELP) Critical Survey

The9 (NASDAQ:NCTY) and Yelp (NYSE:YELP) are both small-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Valuation & Earnings

This table compares The9 and Yelp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The9	$15.31 million	7.04	-$10.06 million	N/A	N/A
Yelp	$1.41 billion	1.41	$132.85 million	$2.21	14.28

Yelp has higher revenue and earnings than The9.

Volatility and Risk

The9 has a beta of 1.8, indicating that its stock price is 80% more volatile than the S&P 500. Comparatively, Yelp has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.

Profitability

This table compares The9 and Yelp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The9	N/A	N/A	N/A
Yelp	10.28%	20.17%	15.18%

Analyst Recommendations

This is a summary of recent ratings and price targets for The9 and Yelp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The9	0	0	0	0	0.00
Yelp	2	4	0	0	1.67

Yelp has a consensus price target of $34.00, suggesting a potential upside of 7.75%. Given Yelp’s stronger consensus rating and higher probable upside, analysts plainly believe Yelp is more favorable than The9.

Insider & Institutional Ownership

0.5% of The9 shares are owned by institutional investors. Comparatively, 90.1% of Yelp shares are owned by institutional investors. 30.8% of The9 shares are owned by company insiders. Comparatively, 8.0% of Yelp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Yelp beats The9 on 8 of the 11 factors compared between the two stocks.

About The9

The9 Limited operates as a cryptocurrency mining business in China, Eastern Europe, Asia, and North America. The company was formerly known as GameNow.net Limited and changed its name to The9 Limited in February 2004. The9 Limited was incorporated in 1999 and is headquartered in Shanghai, the People’s Republic of China.

About Yelp

Yelp Inc. operates a platform that connects consumers with local businesses in the United States and internationally. The company's platform covers various categories, including restaurants, shopping, beauty and fitness, health, and other categories, as well as home, local, auto, professional, pets, events, real estate, and financial services. It provides free and paid advertising products to businesses, which include cost-per-click advertising and multi-location Ad products, as well as enables businesses to deliver targeted advertising to large and high-intent audience; and business listing page products. The company also offers other services comprising Yelp Guest Manager, a subscription-based suite of front-of-house management tools for restaurants, nightlife and certain other venues, which include online reservations, a waitlist management solution that allows consumers to check wait times and join waitlists remotely, as well as through hostless kiosks, and seating and server rotation management tools; Yelp Knowledge program that offers business owners local analytics and insights through access to its historical data and other proprietary content; and Yelp Fusion, which offers free access to various basic information through publicly available APIs, and paid access to content and data for consumer-facing enterprise use. In addition, it provides content licensing, as well as allows third-party data providers to update and manage business listing information on behalf of businesses. Further, the company offers its products directly through its sales force; indirectly through partners; and online through its website and business app, as well as non-advertising partner arrangements. It has partnership with Grubhub for providing consumers with a service to place food orders for pickup and delivery. The company was incorporated in 2004 and is based in San Francisco, California.