Critical Contrast: Zhihu (NYSE:ZH) versus Similarweb (NYSE:SMWB)

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

Earnings & Valuation

This table compares Similarweb and Zhihu”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Similarweb	$249.91 million	3.03	-$11.46 million	($0.35)	-25.46
Zhihu	$493.05 million	0.86	-$23.54 million	$0.22	22.16

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Similarweb	-10.84%	-88.03%	-9.36%
Zhihu	4.34%	3.24%	2.36%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Similarweb	1	1	9	0	2.73
Zhihu	1	0	1	0	2.00

Similarweb presently has a consensus price target of $14.88, suggesting a potential upside of 66.93%. Zhihu has a consensus price target of $4.70, suggesting a potential downside of 3.59%. Given Similarweb’s stronger consensus rating and higher probable upside, analysts plainly believe Similarweb is more favorable than Zhihu.

Volatility and Risk

Similarweb has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Zhihu has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500.

Insider & Institutional Ownership

57.6% of Similarweb shares are held by institutional investors. Comparatively, 28.9% of Zhihu shares are held by institutional investors. 13.6% of Zhihu shares are held 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.

About Similarweb

Similarweb Ltd. provides cloud-based digital intelligence solutions in the United States, Europe, the Asia Pacific, the United Kingdom, Israel, and internationally. The company offers digital research intelligence solutions for its customers to benchmark performance against competitors and market leaders, analyze trends in the market, conduct deeper research into specific companies, and analyze audience behavior; and digital marketing intelligence solutions for its customers to understand their competitors' online acquisition strategies in each marketing channel, and optimize their own strategies. It also provides sales intelligence solutions for its customers to access relevant buying signals and digital insights of their customers to generate leads quickly; and shopper intelligence solutions for its customers to analyze a view of their customers' digital journeys, monitor consumer demand, increase brand visibility in the search process, and optimize category and product level conversion in the purchase process. In addition, the company offers investor intelligence solutions for its customers to access an end-to-end view of market, sector, and company performance to ideate and monitor investment opportunities; forecast market performance; and perform due diligence. Further, it provides data-as-a-service and advisory services. The company serves retail, consumer packaged goods, consumer finance, consultancies, marketing and advertising agencies, media and publishers, business-to-business software, payment processors, travel, and institutional investors. Similarweb Ltd. was incorporated in 2009 and is headquartered in Givatayim, Israel.

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 offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers 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.