Analyzing DoubleDown Interactive (NASDAQ:DDI) and HUYA (NYSE:HUYA)

HUYA (NYSE:HUYA) and DoubleDown Interactive (NASDAQ:DDI) are both small-cap communication services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.

Profitability

This table compares HUYA and DoubleDown Interactive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HUYA	-1.59%	0.20%	0.14%
DoubleDown Interactive	32.91%	12.93%	11.81%

Institutional and Insider Ownership

23.2% of HUYA shares are held by institutional investors. 1.2% of HUYA shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

HUYA has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, DoubleDown Interactive has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Valuation and Earnings

This table compares HUYA and DoubleDown Interactive”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HUYA	$929.83 million	0.56	-$16.10 million	($0.06)	-37.92
DoubleDown Interactive	$359.94 million	2.16	$102.50 million	$2.52	6.23

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

Analyst Recommendations

This is a summary of current recommendations and price targets for HUYA and DoubleDown Interactive, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HUYA	1	1	1	0	2.00
DoubleDown Interactive	0	3	1	0	2.25

HUYA currently has a consensus price target of $3.40, suggesting a potential upside of 49.45%. DoubleDown Interactive has a consensus price target of $19.50, suggesting a potential upside of 24.20%. Given HUYA’s higher probable upside, research analysts clearly believe HUYA is more favorable than DoubleDown Interactive.

Summary

DoubleDown Interactive beats HUYA on 9 of the 13 factors compared between the two stocks.

About HUYA

HUYA Inc. (NYSE: HUYA) operates a game-focused live-streaming platform in China. Its services enable users to watch and interact with live broadcasts of video games, esports competitions, and other entertainment content through websites and mobile applications. The company generates revenue primarily from virtual gifts and other user engagement features, as well as advertising, game-related services, and additional content and platform offerings. HUYA also supports esports events and provides tools for streamers and content creators to produce and distribute live content.

About DoubleDown Interactive

DoubleDown Interactive Co., Ltd. (NASDAQ: DDI) is a South Korean developer and publisher of social casino games. The company creates digital casino-style entertainment products that allow users to play games such as slots and poker using virtual currency rather than real-money wagers. Its flagship product is DoubleDown Casino, a free-to-play social casino platform available through mobile devices and online channels, including social networking platforms. The company also offers related titles and casino-themed games, including DoubleDown Fortunes and other slot-focused products.