Critical Contrast: CoStar Group (NASDAQ:CSGP) vs. Zhihu (NYSE:ZH)

Zhihu (NYSE:ZH) and CoStar Group (NASDAQ:CSGP) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Insider & Institutional Ownership

28.9% of Zhihu shares are held by institutional investors. Comparatively, 96.6% of CoStar Group shares are held by institutional investors. 13.6% of Zhihu shares are held by company insiders. Comparatively, 1.6% of CoStar Group shares are held 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.

Analyst Ratings

This is a summary of recent ratings for Zhihu and CoStar Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zhihu	0	0	0	0	N/A
CoStar Group	0	3	11	0	2.79

CoStar Group has a consensus price target of $100.50, indicating a potential upside of 18.77%. Given CoStar Group’s higher probable upside, analysts plainly believe CoStar Group is more favorable than Zhihu.

Profitability

This table compares Zhihu and CoStar Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zhihu	-20.00%	-16.32%	-11.54%
CoStar Group	15.26%	6.08%	4.99%

Volatility and Risk

Zhihu has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500. Comparatively, CoStar Group has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Earnings & Valuation

This table compares Zhihu and CoStar Group’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zhihu	$591.40 million	0.66	-$118.82 million	($0.19)	-3.35
CoStar Group	$2.46 billion	14.08	$374.70 million	$0.92	91.98

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

Summary

CoStar Group beats Zhihu on 12 of the 13 factors compared between the two stocks.

About Zhihu

Zhihu Inc. operates an online content community in the People's Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company also offers technology, business support, and consulting services; information transmission, software, and information technology services; information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People's Republic of China.

About CoStar Group

CoStar Group, Inc. provides information, analytics, and online marketplace services to the commercial real estate, hospitality, residential, and related professionals industries in the United States, Canada, Europe, the Asia Pacific, and Latin America. The company offers CoStar Property that provides inventory of office, industrial, retail, multifamily, hospitality, and student housing properties and land; CoStar Sales, a robust database of comparable commercial real estate sales transactions; CoStar Market Analytics to view and report on aggregated market and submarket trends; and CoStar Tenant, an online business-to-business prospecting and analytical tool that provides tenant information. It also provides Leasing, a tool to capture, manage, and maintain lease data; CoStar Lease Analysis; Public Record, a searchable database of commercially zoned parcels; CoStar Real Estate Manager, a real estate lease administration, portfolio management, and lease accounting compliance software solution; and CoStar Risk Analytics and CoStar Investment. In addition, it offers apartment marketing sites, such as ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, WestsideRentals.com, AFTER55.com, CorporateHousing.com, ForRentUniversity.com, Apartamentos.com, and Off Campus Partners; LoopNet Premium Lister; LoopNet Diamond, Platinum, and Gold Ads; LandsofAmerica.com, LandAndFarm.com, and LandWatch.com for rural land for-sale; BizBuySell.com, BizQuest.com, and FindaFranchise.com for operating businesses and franchises for-sale; Ten-X, an online auction platform for commercial real estate; and HomeSnap, an online and mobile software platform, as well as Homes.com, a homes for sale listings site. The company was founded in 1987 and is headquartered in Washington, the District of Columbia.