Financial Analysis: NEXON (OTCMKTS:NEXOY) versus GungHo Online Entertainment (OTCMKTS:GUNGF)

GungHo Online Entertainment (OTCMKTS:GUNGF) and NEXON (OTCMKTS:NEXOY) are both communication services companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Valuation & Earnings

This table compares GungHo Online Entertainment and NEXON”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GungHo Online Entertainment	N/A	N/A	N/A	$53.82	0.29
NEXON	$3.18 billion	4.85	$616.75 million	C$1.11	17.51

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

Profitability

This table compares GungHo Online Entertainment and NEXON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GungHo Online Entertainment	N/A	N/A	N/A
NEXON	26.37%	12.45%	9.72%

Dividends

GungHo Online Entertainment pays an annual dividend of $199.57 per share and has a dividend yield of 1,263.1%. NEXON pays an annual dividend of C$0.26 per share and has a dividend yield of 1.3%. GungHo Online Entertainment pays out 370.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NEXON pays out 23.4% of its earnings in the form of a dividend.

Institutional and Insider Ownership

2.6% of GungHo Online Entertainment shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for GungHo Online Entertainment and NEXON, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GungHo Online Entertainment	0	0	0	0	0.00
NEXON	0	2	2	0	2.50

Summary

NEXON beats GungHo Online Entertainment on 8 of the 11 factors compared between the two stocks.

About GungHo Online Entertainment

GungHo Online Entertainment, Inc. plans, develops, operates, and distributes smartphone applications, console games, and online computer games. The company was formerly known as ONSale Co., Ltd. and changed its name to GungHo Online Entertainment, Inc. in August 2002. GungHo Online Entertainment, Inc. was incorporated in 1998 and is based in Tokyo, Japan.

About NEXON

NEXON Co., Ltd. produces, develops, and services PC online and mobile games. It operates through five segments: Japan, Korea, China, North America, and Others. The company's PC online game titles include MapleStory, Dungeon & Fighter, and EA SPORTS FIFA ONLINE 4. The company was formerly known as NEXON Japan Co., Ltd. and changed its name to NEXON Co., Ltd. in April 2009. NEXON Co., Ltd. was founded in 1994 and is headquartered in Tokyo, Japan.