Comparing Tencent Music Entertainment Group (NYSE:TME) & Playtika (NASDAQ:PLTK)

Tencent Music Entertainment Group (NYSE:TME) and Playtika (NASDAQ:PLTK) are both communication services companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Dividends

Tencent Music Entertainment Group pays an annual dividend of $0.23 per share and has a dividend yield of 2.7%. Playtika pays an annual dividend of $0.40 per share and has a dividend yield of 19.0%. Tencent Music Entertainment Group pays out 28.4% of its earnings in the form of a dividend. Playtika pays out -54.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Playtika is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Tencent Music Entertainment Group and Playtika”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent Music Entertainment Group	$33.93 billion	0.40	$1.54 billion	$0.81	10.66
Playtika	$2.83 billion	0.28	-$206.40 million	($0.73)	-2.89

Tencent Music Entertainment Group has higher revenue and earnings than Playtika. Playtika is trading at a lower price-to-earnings ratio than Tencent Music Entertainment Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Tencent Music Entertainment Group and Playtika’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent Music Entertainment Group	26.27%	11.53%	8.87%
Playtika	-9.89%	-65.82%	6.17%

Institutional and Insider Ownership

24.3% of Tencent Music Entertainment Group shares are held by institutional investors. Comparatively, 11.9% of Playtika shares are held by institutional investors. 5.7% of Playtika shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Tencent Music Entertainment Group and Playtika, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent Music Entertainment Group	0	9	3	1	2.38
Playtika	1	3	2	0	2.17

Tencent Music Entertainment Group currently has a consensus price target of $17.21, suggesting a potential upside of 99.29%. Playtika has a consensus price target of $3.67, suggesting a potential upside of 73.78%. Given Tencent Music Entertainment Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Tencent Music Entertainment Group is more favorable than Playtika.

Risk & Volatility

Tencent Music Entertainment Group has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Playtika has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Summary

Tencent Music Entertainment Group beats Playtika on 13 of the 17 factors compared between the two stocks.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

About Playtika

Playtika Holding Corp., together with its subsidiaries, develops mobile games in the United States, Europe, Middle East, Africa, Asia pacific, and internationally. The company owns a portfolio of casual and social casino-themed games. It distributes its games to the end customer through various web and mobile platforms and direct-to-consumer platforms. Playtika Holding Corp. was founded in 2010 and is headquartered in Herzliya Pituach, Israel. Playtika Holding Corp. is a subsidiary of Playtika Holding UK II Limited.