Critical Analysis: Autohome (NYSE:ATHM) & Travelzoo (NASDAQ:TZOO)

Autohome (NYSE:ATHM) and Travelzoo (NASDAQ:TZOO) are both communication services companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Risk & Volatility

Autohome has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500. Comparatively, Travelzoo has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Earnings & Valuation

This table compares Autohome and Travelzoo”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Autohome	$5.49 billion	0.46	$225.19 million	$1.16	18.81
Travelzoo	$91.72 million	0.69	$4.70 million	$0.03	205.63

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Autohome and Travelzoo, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Autohome	2	4	0	0	1.67
Travelzoo	2	0	2	0	2.00

Autohome presently has a consensus target price of $17.77, suggesting a potential downside of 18.55%. Travelzoo has a consensus target price of $13.83, suggesting a potential upside of 124.24%. Given Travelzoo’s stronger consensus rating and higher probable upside, analysts plainly believe Travelzoo is more favorable than Autohome.

Insider & Institutional Ownership

63.1% of Autohome shares are owned by institutional investors. Comparatively, 27.4% of Travelzoo shares are owned by institutional investors. 5.7% of Autohome shares are owned by company insiders. Comparatively, 45.3% of Travelzoo shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Autohome and Travelzoo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Autohome	17.05%	4.44%	3.53%
Travelzoo	0.51%	-9.35%	1.00%

About Autohome

Autohome Inc. operates as an online destination for automobile consumers in the People’s Republic of China. The company delivers interactive content and tools to automobile consumers through its three websites, autohome.com.cn, che168.com, and ttpai.cn on PCs, mobile devices, mobile applications, and mini apps. It provides media services, including automaker advertising services and regional marketing campaigns; and leads generation services comprising dealer subscription services, advertising services for individual dealers, and used automobile listing and other platform-based services. The company offers Autohome Mall, an online transaction platform; and online bidding platform for used automobiles, as well as collects commissions for facilitating transactions of auto-financing and insurance products on its platform. The company was formerly known as Sequel Limited and changed its name to Autohome Inc. in October 2011. Autohome Inc. was incorporated in 2008 and is headquartered in Beijing, the People’s Republic of China.

About Travelzoo

Travelzoo, together with its subsidiaries, operates as an Internet media company that provides travel, entertainment, and local experiences worldwide. It operates in four segments: Travelzoo North America, Travelzoo Europe, Jack's Flight Club, and New Initiatives. The company offers Travelzoo website, Travelzoo Top 20 email newsletters, Standalone email newsletters, Travelzoo Network, Travelzoo mobile applications, Jack's Flight Club website, Jack's Flight Club mobile applications, and Jack's Flight Club newsletters. The company's Travelzoo website and newsletters include local deals and getaways listings that allow members to purchase vouchers for offers from local businesses, such as spas, hotels, and restaurants; Jack's Flight Club, a subscription service that provides members with information about exceptional airfares; and Travelzoo Network, a network of third-party websites that list travel deals published by the company. It serves airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was incorporated in 1998 and is headquartered in New York, New York.