Duolingo (NASDAQ:DUOL) versus Frontdoor (NASDAQ:FTDR) Critical Comparison

Duolingo (NASDAQ:DUOL) and Frontdoor (NASDAQ:FTDR) are both mid-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Insider & Institutional Ownership

91.6% of Duolingo shares are owned by institutional investors. 16.6% of Duolingo shares are owned by company insiders. Comparatively, 1.6% of Frontdoor shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Duolingo has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Frontdoor has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500.

Profitability

This table compares Duolingo and Frontdoor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Duolingo	35.88%	12.10%	8.24%
Frontdoor	12.72%	120.90%	14.86%

Analyst Ratings

This is a summary of recent recommendations and price targets for Duolingo and Frontdoor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Duolingo	1	14	8	1	2.38
Frontdoor	0	3	5	0	2.62

Duolingo presently has a consensus price target of $124.38, indicating a potential downside of 13.79%. Frontdoor has a consensus price target of $92.60, indicating a potential upside of 19.89%. Given Frontdoor’s stronger consensus rating and higher possible upside, analysts clearly believe Frontdoor is more favorable than Duolingo.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Duolingo	$1.15 billion	5.90	$414.07 million	$8.44	17.09
Frontdoor	$2.15 billion	2.48	$255.00 million	$3.77	20.49

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

Summary

Duolingo beats Frontdoor on 8 of the 15 factors compared between the two stocks.

About Duolingo

Duolingo, Inc. operates as a mobile learning platform in the United States, the United Kingdom, and internationally. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. It also provides a digital English language proficiency assessment exam. Duolingo, Inc. was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.

About Frontdoor

Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company’s home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems. The company serves homeowners under the Frontdoor, American Home Shield, HSA, OneGuard, Landmark Home Warranty, Frontdoor logo, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.