Snap (SNAP) versus Cheetah Mobile (CMCM) Critical Analysis

Snap (NYSE: SNAP) and Cheetah Mobile (NYSE:CMCM) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, dividends and risk.

Valuation and Earnings

This table compares Snap and Cheetah Mobile’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Snap N/A N/A N/A ($3.18) -4.85
Cheetah Mobile $657.45 million 2.37 -$11.59 million $0.36 30.14

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

Insider and Institutional Ownership

18.9% of Snap shares are owned by institutional investors. Comparatively, 7.2% of Cheetah Mobile shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Snap and Cheetah Mobile, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Snap 13 20 11 0 1.95
Cheetah Mobile 0 3 0 0 2.00

Snap currently has a consensus price target of $17.15, indicating a potential upside of 11.27%. Cheetah Mobile has a consensus price target of $11.67, indicating a potential upside of 7.53%. Given Snap’s higher possible upside, research analysts plainly believe Snap is more favorable than Cheetah Mobile.

Profitability

This table compares Snap and Cheetah Mobile’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Snap N/A N/A N/A
Cheetah Mobile 7.44% 10.76% 6.35%

Summary

Cheetah Mobile beats Snap on 6 of the 9 factors compared between the two stocks.

Snap Company Profile

Snap Inc., formerly Snapchat, Inc., is a camera company. The Company’s flagship product, Snapchat, is a camera application that helps people to communicate through short videos and images known as a Snap. The Company offers three ways for people to make Snaps: the Snapchat application, Publishers Tools that help its partners to create Publisher Stories, and Spectacles, its sunglasses that make Snaps. Snaps are viewed primarily through the Snapchat application, but can also be embedded on the Web or on television in certain circumstances. Snapchat opens directly into the Camera, helping in creating a Snap and sending it to friends. The Company’s advertising products include Snap Ads and Sponsored Creative Tools, such as Sponsored Lenses and Sponsored Geofilters. As of December 31, 2016, on an average, 158 million people used Snapchat every day to Snap with family, watch Stories from friends, see events from around the world, and explore curated content from publishers.

Cheetah Mobile Company Profile

Cheetah Mobile Inc. is a holding company. The Company and its consolidated subsidiaries, variable interest entities (VIEs) and a VIE’s subsidiary are engaged in the provision of online marketing services, Internet value-added services, and Internet security services and others. The Company operates a platform that offers mobile and personal computer (PC) applications for its users and global content promotional channels for its customers, both of which are powered by its cloud-based data analytics engines. For its users, its diversified suite of applications optimizes mobile and PC Internet system performance, and provides real time protection against known and unknown security threats. Its data analytics engines perform real time analysis of mobile applications, program files and Websites on their devices for behavior that may impair system performance or impose security risks.

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