K12 (NYSE: LRN) and Xueda Education Group (NYSE:XUE) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitabiliy, analyst recommendations and dividends.

Insider and Institutional Ownership

79.2% of K12 shares are owned by institutional investors. 18.3% of K12 shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares K12 and Xueda Education Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
K12 0.05% 3.20% 2.39%
Xueda Education Group -4.53% -15.97% -4.86%

Analyst Recommendations

This is a summary of current ratings for K12 and Xueda Education Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
K12 0 0 2 0 3.00
Xueda Education Group 0 0 0 0 N/A

K12 currently has a consensus target price of $18.50, suggesting a potential upside of 7.00%. Given K12’s higher probable upside, research analysts clearly believe K12 is more favorable than Xueda Education Group.

Valuation and Earnings

This table compares K12 and Xueda Education Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
K12 $888.52 million 0.79 $87.41 million N/A N/A
Xueda Education Group N/A N/A N/A N/A N/A

K12 has higher revenue and earnings than Xueda Education Group.

Summary

K12 beats Xueda Education Group on 8 of the 8 factors compared between the two stocks.

K12 Company Profile

K12 Inc. (K12) is a technology-based education company. The Company offers curriculum, software systems and educational services designed to facilitate individualized learning for students in kindergarten through 12th grade (K-12). It provides a continuum of technology-based educational products and solutions to public school districts, public schools, virtual charter schools, private schools and families. The Company offers a set of products and services primarily to three lines of business, which include Managed Public School Programs, which consists of virtual and blended schools; Institutional business, which includes educational products and services sold to school districts, public schools and other educational institutions, and Private Pay Schools and Other, which includes private schools, including international, for which it charges student tuition and direct consumer sales. It sells individual online courses and supplemental educational products directly to families.

Xueda Education Group Company Profile

Xueda Education Group is a holding company. The Company, through its subsidiaries and consolidated variable interest entity (VIE), is engaged in providing private personalized tutoring services for primary and secondary school students in the People’s Republic of China (PRC). The Company has developed and implemented a results-oriented, student-centric service delivery model. The Company’s personalized service model consists of six components: assessment, consultation, formulation of a customized study plan, personalized tutoring, delivery of student-oriented supporting services and results. The Company’s learning centers are directly operated by it under its Xueda brand. The Company delivers its services to students through a national network, consisting of approximately 467 learning centers, all of which are operated by it, in 85 cities in China.

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