Financial Comparison: The9 (NASDAQ:NCTY) vs. Sprout Social (NASDAQ:SPT)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sprout Social	-6.13%	-8.80%	-3.64%
The9	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sprout Social and The9, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprout Social	2	3	3	1	2.33
The9	1	0	0	0	1.00

Sprout Social presently has a consensus price target of $10.43, suggesting a potential downside of 3.74%. Given Sprout Social’s stronger consensus rating and higher possible upside, research analysts plainly believe Sprout Social is more favorable than The9.

Valuation and Earnings

This table compares Sprout Social and The9″s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprout Social	$457.55 million	1.43	-$43.33 million	($0.50)	-21.67
The9	$15.43 million	3.90	-$57.55 million	$6.00	0.66

Sprout Social has higher revenue and earnings than The9. Sprout Social is trading at a lower price-to-earnings ratio than The9, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Sprout Social has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, The9 has a beta of 2.09, suggesting that its stock price is 109% more volatile than the S&P 500.

Insider & Institutional Ownership

0.5% of The9 shares are held by institutional investors. 9.6% of Sprout Social shares are held by company insiders. Comparatively, 30.8% of The9 shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

The9 beats Sprout Social on 9 of the 15 factors compared between the two stocks.

About Sprout Social

Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company provides cloud software for social messaging, data and workflows in a unified system of record, intelligence, and action. It offers integrated tools, such as social engagement/response; publishing; reporting and analytics; social listening and business intelligence; reputation management; social commerce; employee advocacy; and automation and workflows. In addition, the company provides smart inbox, social customer relationship management, social monitoring and alerts, customer service tools, and automation; and centralized content planning, creation, and publishing, automated scheduling, content performance reporting, suggested content, message approval workflows, publishing permissions and governance, and content and asset libraries. Further, it offers social media; content performance, customer service and team, custom report builder, and reporting API; and market research, brand health, competitive insights, consumer trends, and product feedback; and social commerce, reputation management, employee advocacy, mobile applications, and chat bot creation and management. Additionally, the company offers professional services consisting of consulting and training services. It serves social and community management; public relations; marketing; influencer marketing; customer service and care; commerce, sales and customer acquisition; recruiting and hiring, product development, and business strategy; and small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. Sprout Social, Inc. was incorporated in 2010 and is headquartered in Chicago, Illinois.

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.