Head-To-Head Comparison: Roku (NASDAQ:ROKU) versus Netflix (NASDAQ:NFLX)

Netflix (NASDAQ:NFLX) and Roku (NASDAQ:ROKU) are both large-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Valuation & Earnings

This table compares Netflix and Roku”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Netflix	$39.00 billion	13.28	$8.71 billion	$23.47	51.94
Roku	$4.11 billion	3.36	-$129.39 million	($0.42)	-223.40

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

Analyst Recommendations

This is a summary of current recommendations for Netflix and Roku, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Netflix	3	8	26	2	2.69
Roku	2	7	17	2	2.68

Netflix currently has a consensus price target of $1,337.63, indicating a potential upside of 9.73%. Roku has a consensus price target of $101.33, indicating a potential upside of 8.00%. Given Netflix’s stronger consensus rating and higher possible upside, research analysts clearly believe Netflix is more favorable than Roku.

Institutional & Insider Ownership

80.9% of Netflix shares are held by institutional investors. Comparatively, 86.3% of Roku shares are held by institutional investors. 1.4% of Netflix shares are held by company insiders. Comparatively, 14.0% of Roku shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Netflix has a beta of 1.59, indicating that its share price is 59% more volatile than the S&P 500. Comparatively, Roku has a beta of 2.13, indicating that its share price is 113% more volatile than the S&P 500.

Profitability

This table compares Netflix and Roku’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Netflix	24.58%	42.50%	19.42%
Roku	-1.40%	-2.44%	-1.44%

Summary

Netflix beats Roku on 11 of the 14 factors compared between the two stocks.

About Netflix

Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices. It has operations in approximately 190 countries. The company was incorporated in 1997 and is headquartered in Los Gatos, California.

About Roku

Roku, Inc., together with its subsidiaries, operates a TV streaming platform in the United states and internationally. The company operates in two segments, Platform and Devices. Its streaming platform allows users to find and access TV shows, movies, news, sports, and others. The Platform segment offers digital advertising, including direct and programmatic video advertising, media and entertainment promotional spending, and related services; and streaming services distribution, such as subscription and transaction revenue shares, and sale of premium subscriptions and branded app buttons on remote controls. The Devices segment provides sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories as well as licensing arrangements with service operators. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.