Contrasting Tencent (TCEHY) & Its Peers

Tencent (OTCMKTS:TCEHY) is one of 115 public companies in the “Internet Content & Information” industry, but how does it compare to its competitors? We will compare Tencent to related businesses based on the strength of its valuation, dividends, earnings, risk, analyst recommendations, institutional ownership and profitability.

Dividends

Tencent pays an annual dividend of $0.26 per share and has a dividend yield of 0.6%. Tencent pays out 9.0% of its earnings in the form of a dividend. As a group, “Internet Content & Information” companies pay a dividend yield of 27.1% and pay out 4.4% of their earnings in the form of a dividend. Tencent lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tencent	33.72%	13.08%	6.49%
Tencent Competitors	-24.31%	-46.37%	-7.81%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Tencent and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	2	2	0	2.50
Tencent Competitors	388	1446	2654	35	2.52

Tencent currently has a consensus price target of $212.50, indicating a potential upside of 419.95%. As a group, “Internet Content & Information” companies have a potential upside of 22.61%. Given Tencent’s higher probable upside, equities analysts plainly believe Tencent is more favorable than its competitors.

Institutional and Insider Ownership

0.0% of Tencent shares are owned by institutional investors. Comparatively, 28.0% of shares of all “Internet Content & Information” companies are owned by institutional investors. 32.4% of shares of all “Internet Content & Information” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Tencent and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Tencent	$82.41 billion	$27.97 billion	14.19
Tencent Competitors	$2.29 billion	$557.28 million	305.72

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

Risk and Volatility

Tencent has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, Tencent’s competitors have a beta of 2.62, suggesting that their average stock price is 162% more volatile than the S&P 500.

Summary

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

About Tencent

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, digital assets management, etc.; 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.