Analyzing Tencent (TCEHY) & Its Rivals

Tencent (OTCMKTS:TCEHY) is one of 192 public companies in the “Interactive Media & Services” industry, but how does it weigh in compared to its rivals? We will compare Tencent to similar companies based on the strength of its earnings, dividends, analyst recommendations, profitability, institutional ownership, risk and valuation.

Valuation and Earnings

This table compares Tencent and its rivals revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Tencent	$104.58 billion	$31.28 billion	14.43
Tencent Competitors	$12.05 billion	$3.48 billion	21.85

Tencent has higher revenue and earnings than its rivals. Tencent is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Tencent and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent	29.83%	19.83%	11.76%
Tencent Competitors	-349.35%	-22.60%	4.06%

Institutional and Insider Ownership

0.0% of Tencent shares are held by institutional investors. Comparatively, 41.1% of shares of all “Interactive Media & Services” companies are held by institutional investors. 24.0% of shares of all “Interactive Media & Services” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Tencent pays an annual dividend of $0.60 per share and has a dividend yield of 1.1%. Tencent pays out 16.4% of its earnings in the form of a dividend. As a group, “Interactive Media & Services” companies pay a dividend yield of 17.8% and pay out 4.9% of their earnings in the form of a dividend. Tencent lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Volatility & Risk

Tencent has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Tencent’s rivals have a beta of 1.81, meaning that their average share price is 81% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Tencent and its rivals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	2	1	0	2.33
Tencent Competitors	1437	6002	11538	441	2.57

Tencent currently has a consensus target price of $88.00, suggesting a potential upside of 67.11%. As a group, “Interactive Media & Services” companies have a potential upside of 31.47%. Given Tencent’s higher possible upside, research analysts plainly believe Tencent is more favorable than its rivals.

Summary

Tencent rivals beat Tencent on 9 of the 15 factors compared.

Tencent Company Profile

Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.