iQIYI, Inc. (NASDAQ:IQ) shares are up more than 109.97% this year and recently decreased -9.20% or -$3.31 to settle at $32.65. HUYA Inc. (NYSE:HUYA), on the other hand, is up 120.98% year to date as of 07/19/2018. It currently trades at $35.49 and has returned -5.03% during the past week.
iQIYI, Inc. (NASDAQ:IQ) and HUYA Inc. (NYSE:HUYA) are the two most active stocks in the Internet Information Providers industry based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.Growth
Companies that can increase earnings at a high compound rate over time are attractive to investors. Analysts expect IQ to grow earnings at a 25.60% annual rate over the next 5 years.Profitability and Returns
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use Return on Investment (ROI) to measure this. IQ’s ROI is 28.80% while HUYA has a ROI of -158.20%. The interpretation is that IQ’s business generates a higher return on investment than HUYA’s.Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. IQ has a current ratio of 0.40 compared to 2.50 for HUYA. This means that HUYA can more easily cover its most immediate liabilities over the next twelve months.Valuation
IQ trades at a P/S of 7.56, compared to a forward P/E of 57.15, and a P/S of 17.90 for HUYA. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. IQ is currently priced at a -79.49% to its one-year price target of 159.21. Comparatively, HUYA is -82.71% relative to its price target of 205.28. This suggests that HUYA is the better investment over the next year.
iQIYI, Inc. (NASDAQ:IQ) beats HUYA Inc. (NYSE:HUYA) on a total of 6 of the 12 factors compared between the two stocks. IQ is growing fastly and generates a higher return on investment. In terms of valuation, IQ is the cheaper of the two stocks on an earnings and sales basis, Finally, IQ has better sentiment signals based on short interest.