Critical Contrast: NetEase (NASDAQ:NTES) versus C3.ai (NYSE:AI)

NetEase (NASDAQ:NTES) and C3.ai (NYSE:AI) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.

Profitability

This table compares NetEase and C3.ai’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetEase	28.75%	24.19%	16.80%
C3.ai	-93.36%	-30.95%	-26.25%

Earnings and Valuation

This table compares NetEase and C3.ai’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetEase	$105.27 billion	0.55	$4.14 billion	$6.45	14.01
C3.ai	$310.58 million	10.03	-$279.70 million	($2.34)	-10.66

NetEase has higher revenue and earnings than C3.ai. C3.ai is trading at a lower price-to-earnings ratio than NetEase, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

NetEase has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, C3.ai has a beta of 1.83, meaning that its share price is 83% more volatile than the S&P 500.

Insider and Institutional Ownership

11.1% of NetEase shares are owned by institutional investors. Comparatively, 39.0% of C3.ai shares are owned by institutional investors. 54.7% of NetEase shares are owned by insiders. Comparatively, 34.0% of C3.ai shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

NetEase pays an annual dividend of $1.97 per share and has a dividend yield of 2.2%. C3.ai pays an annual dividend of $0.90 per share and has a dividend yield of 3.6%. NetEase pays out 30.5% of its earnings in the form of a dividend. C3.ai pays out -38.5% 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. C3.ai is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for NetEase and C3.ai, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	0	2	5	0	2.71
C3.ai	2	5	3	1	2.27

NetEase currently has a consensus price target of $123.86, suggesting a potential upside of 37.07%. C3.ai has a consensus price target of $30.33, suggesting a potential upside of 21.58%. Given NetEase’s stronger consensus rating and higher probable upside, research analysts clearly believe NetEase is more favorable than C3.ai.

Summary

NetEase beats C3.ai on 11 of the 17 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 C3.ai

C3.ai, Inc. operates as an enterprise artificial intelligence (AI) software company in North America, Europe, the Middle East, Africa, the Asia Pacific, and internationally. The company provides C3 AI platform, an application development and runtime environment that enables customers to design, develop, and deploy enterprise AI applications; C3 AI Ex Machina for analysis-ready data; C3 AI CRM, an industry specific customer relationship management solution; and C3 Generative AI Product Suite that enables to locate, retrieve, and present information. It also offers C3 AI applications, including C3 AI Inventory Optimization, a solution to optimize raw material, in-process, and finished goods inventory levels; C3 AI Supply Network Risk, which identifies emerging inbound and outbound risks across the network; C3 AI Sustainability Suite, which helps to decrease greenhouse gas emission; C3 AI Production Schedule Optimization, a solution for scheduling production; C3 AI Financial Services Suite, which helps to minimize compliance risks; and C3 AI Energy Management solution. In addition, it offers integrated turnkey enterprise AI applications for oil and gas, chemicals, utilities, manufacturing, financial services, defense, intelligence, aerospace, healthcare, and telecommunications market. It has strategic partnerships with Baker Hughes in the areas of oil and gas market; Booz Allen to provide solutions to government, defense, and intelligence sectors; Raytheon; and AWS, Google, and Microsoft. The company was formerly known as C3 IoT, Inc. and changed its name to C3.ai, Inc. in June 2019. C3.ai, Inc. was incorporated in 2009 and is headquartered in Redwood City, California.