Paramount Skydance (NASDAQ:PSKY) vs. NetEase (NASDAQ:NTES) Critical Survey

NetEase (NASDAQ:NTES) and Paramount Skydance (NASDAQ:PSKY) are both large-cap communication services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, risk, institutional ownership, earnings, profitability, valuation and analyst recommendations.

Profitability

This table compares NetEase and Paramount Skydance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetEase	29.85%	21.04%	15.59%
Paramount Skydance	-2.13%	4.11%	1.21%

Earnings & Valuation

This table compares NetEase and Paramount Skydance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetEase	$16.11 billion	5.30	$4.83 billion	$7.53	17.72
Paramount Skydance	$28.89 billion	0.36	-$621.00 million	$0.57	16.26

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

Dividends

NetEase pays an annual dividend of $2.87 per share and has a dividend yield of 2.2%. Paramount Skydance pays an annual dividend of $0.20 per share and has a dividend yield of 2.2%. NetEase pays out 38.1% of its earnings in the form of a dividend. Paramount Skydance pays out 35.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Paramount Skydance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

NetEase has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Paramount Skydance has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500.

Institutional & Insider Ownership

11.1% of NetEase shares are owned by institutional investors. Comparatively, 73.0% of Paramount Skydance shares are owned by institutional investors. 54.7% of NetEase shares are owned by insiders. Comparatively, 0.4% of Paramount Skydance shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for NetEase and Paramount Skydance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	0	3	7	0	2.70
Paramount Skydance	8	5	2	0	1.60

NetEase presently has a consensus price target of $158.38, suggesting a potential upside of 18.71%. Paramount Skydance has a consensus price target of $11.38, suggesting a potential upside of 22.81%. Given Paramount Skydance’s higher possible upside, analysts clearly believe Paramount Skydance is more favorable than NetEase.

Summary

NetEase beats Paramount Skydance on 10 of the 16 factors compared between the two stocks.

About NetEase

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally . The company operates through Games and Related Value-Added Services, Youdao, Cloud Music, and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, Youdao Listening Pod, Youdao Smart Light, Youdao Pocket Translator, and Youdao Super Dictionary; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services also include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.

About Paramount Skydance

Paramount Global is a media and entertainment company which creates premium content and experiences for audiences. The company’s portfolio of consumer brands includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount , Pluto TV and Simon & Schuster, among others. Paramount Global, formerly known as ViacomCBS Inc., is based in NEW YORK.