Comparing Tencent Music Entertainment Group (NYSE:TME) and Playtika (NASDAQ:PLTK)

Tencent Music Entertainment Group (NYSE:TME) and Playtika (NASDAQ:PLTK) are both communication services companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings for Tencent Music Entertainment Group and Playtika, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent Music Entertainment Group	0	9	3	1	2.38
Playtika	1	3	2	0	2.17

Tencent Music Entertainment Group presently has a consensus target price of $17.21, suggesting a potential upside of 102.17%. Playtika has a consensus target price of $3.67, suggesting a potential upside of 77.13%. Given Tencent Music Entertainment Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Tencent Music Entertainment Group is more favorable than Playtika.

Insider and Institutional Ownership

24.3% of Tencent Music Entertainment Group shares are held by institutional investors. Comparatively, 11.9% of Playtika shares are held by institutional investors. 5.7% of Playtika shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Tencent Music Entertainment Group and Playtika’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent Music Entertainment Group	26.27%	11.53%	8.87%
Playtika	-9.89%	-65.82%	6.17%

Volatility and Risk

Tencent Music Entertainment Group has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Playtika has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Earnings & Valuation

This table compares Tencent Music Entertainment Group and Playtika”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent Music Entertainment Group	$4.71 billion	2.85	$1.54 billion	$0.81	10.51
Playtika	$2.76 billion	0.29	-$206.40 million	($0.73)	-2.84

Tencent Music Entertainment Group has higher revenue and earnings than Playtika. Playtika is trading at a lower price-to-earnings ratio than Tencent Music Entertainment Group, indicating that it is currently the more affordable of the two stocks.

Summary

Tencent Music Entertainment Group beats Playtika on 13 of the 15 factors compared between the two stocks.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

About Playtika

Playtika Holding Corp., together with its subsidiaries, develops mobile games in the United States, Europe, Middle East, Africa, Asia pacific, and internationally. The company owns a portfolio of casual and social casino-themed games. It distributes its games to the end customer through various web and mobile platforms and direct-to-consumer platforms. Playtika Holding Corp. was founded in 2010 and is headquartered in Herzliya Pituach, Israel. Playtika Holding Corp. is a subsidiary of Playtika Holding UK II Limited.