Contrasting Duolingo (NASDAQ:DUOL) and Frontdoor (NASDAQ:FTDR)

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

Profitability

This table compares Frontdoor and Duolingo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Frontdoor	12.72%	120.90%	14.86%
Duolingo	35.88%	12.10%	8.24%

Risk and Volatility

Frontdoor has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500. Comparatively, Duolingo has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Frontdoor and Duolingo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Frontdoor	0	3	5	0	2.62
Duolingo	1	14	8	1	2.38

Frontdoor currently has a consensus price target of $92.60, suggesting a potential upside of 14.24%. Duolingo has a consensus price target of $124.38, suggesting a potential downside of 12.67%. Given Frontdoor’s stronger consensus rating and higher possible upside, equities analysts plainly believe Frontdoor is more favorable than Duolingo.

Earnings & Valuation

This table compares Frontdoor and Duolingo”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Frontdoor	$2.09 billion	2.67	$255.00 million	$3.77	21.50
Duolingo	$1.04 billion	6.42	$414.07 million	$8.44	16.87

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

Institutional and Insider Ownership

91.6% of Duolingo shares are owned by institutional investors. 1.6% of Frontdoor shares are owned by company insiders. Comparatively, 16.6% of Duolingo shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Duolingo beats Frontdoor on 8 of the 15 factors compared between the two stocks.

About Frontdoor

Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company’s home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems. The company serves homeowners under the Frontdoor, American Home Shield, HSA, OneGuard, Landmark Home Warranty, Frontdoor logo, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.

About Duolingo

Duolingo, Inc. operates as a mobile learning platform in the United States, the United Kingdom, and internationally. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. It also provides a digital English language proficiency assessment exam. Duolingo, Inc. was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.