Critical Analysis: King Digital Entertainment (KING) and Its Competitors

King Digital Entertainment (NYSE: KING) is one of 60 publicly-traded companies in the “Application Software” industry, but how does it contrast to its competitors? We will compare King Digital Entertainment to similar companies based on the strength of its institutional ownership, profitability, risk, valuation, earnings, analyst recommendations and dividends.

Profitability

This table compares King Digital Entertainment and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
King Digital Entertainment 19.58% 33.71% 24.95%
King Digital Entertainment Competitors -23.83% -240.19% -12.40%

Valuation and Earnings

This table compares King Digital Entertainment and its competitors gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
King Digital Entertainment N/A N/A 10.29
King Digital Entertainment Competitors $1.02 billion $67.00 million 585.96

King Digital Entertainment’s competitors have higher revenue and earnings than King Digital Entertainment. King Digital Entertainment 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.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for King Digital Entertainment and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
King Digital Entertainment 0 0 0 0 N/A
King Digital Entertainment Competitors 189 1531 2891 91 2.61

As a group, “Application Software” companies have a potential upside of 7.92%. Given King Digital Entertainment’s competitors higher possible upside, analysts clearly believe King Digital Entertainment has less favorable growth aspects than its competitors.

Insider & Institutional Ownership

70.1% of shares of all “Application Software” companies are owned by institutional investors. 15.4% of shares of all “Application Software” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

King Digital Entertainment competitors beat King Digital Entertainment on 5 of the 8 factors compared.

About King Digital Entertainment

King Digital Entertainment plc is an interactive entertainment company for the mobile world. The Company has four franchises: Candy Crush, Farm Heroes, Bubble Witch and Pet Rescue. The Company develops and publishes games that can be played on its king.com and royalgames.com Websites, Facebook and, mobile platforms, such as iOS and Android. The Company is involved in developing and monetizing digital games on multiple platforms. The Company’s games include Candy Crush Saga, Candy Crush Soda Saga, Farm Heroes Saga, Pet Rescue Saga and Bubble Witch 2 Saga. As of December 31, 2014, the Company had 533 million monthly active users (MAUs), 149 million daily active users (DAUs), 356 million monthly unique users (MUUs) and 8,344 million monthly unique payers (MUPs).

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