China Online Education Group (NYSE: COE) and ITT Educational Services (NYSE:ESI) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Institutional and Insider Ownership

24.1% of China Online Education Group shares are owned by institutional investors. Comparatively, 62.7% of ITT Educational Services shares are owned by institutional investors. 3.8% of ITT Educational Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

China Online Education Group has a beta of -1.54, suggesting that its share price is 254% less volatile than the S&P 500. Comparatively, ITT Educational Services has a beta of 1.96, suggesting that its share price is 96% more volatile than the S&P 500.

Profitability

This table compares China Online Education Group and ITT Educational Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Online Education Group -117.94% -2,476.17% -78.28%
ITT Educational Services 2.44% 10.57% 2.86%

Analyst Ratings

This is a summary of recent ratings and price targets for China Online Education Group and ITT Educational Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Online Education Group 0 0 0 0 N/A
ITT Educational Services 2 0 0 0 1.00

Earnings and Valuation

This table compares China Online Education Group and ITT Educational Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
China Online Education Group $75.30 million 4.78 -$79.57 million ($6.39) -2.81
ITT Educational Services N/A N/A N/A $0.86 0.42

ITT Educational Services has higher revenue, but lower earnings than China Online Education Group. China Online Education Group is trading at a lower price-to-earnings ratio than ITT Educational Services, indicating that it is currently the more affordable of the two stocks.

Summary

ITT Educational Services beats China Online Education Group on 7 of the 8 factors compared between the two stocks.

About China Online Education Group

China Online Education Group is engaged in providing online English language education services to students in the People’s Republic of China (the PRC). The Company operates an online education platform that provides online tutoring programs to students through the Internet. Its platform analyzes teachers’ teaching aptitudes, feedback and rating from students, as well as background, and recommends suitable teachers to students according to their respective characteristics and learning objectives. The Company develops and tailors its curriculum to its interactive lesson format. The Company offers various courses, which include Classic English and Classic English Junior that are focused on the development of English communication skills. The Company also offers various specialty courses that are focused at situation-based English education and test preparation needs, such as Business English and International English Language Testing System (IELTS) Speaking.

About ITT Educational Services

ITT Educational Services, Inc. is a provider of postsecondary degree programs in the United States. The Company offers master, bachelor and associate degree programs to over 45,000 students, and short-term information technology and business learning solutions for career advancers and other professionals. It has approximately 138 campus locations in over 40 states. It offers online programs to students in all over 50 states. It designs its education programs, after consultation with employers and other constituents, to allow graduates prepare for careers in different fields involving their areas of study. It provides career-oriented education programs under the ITT Technical Institute name and the Daniel Webster College (DWC) name. The ITT Technical Institutes offers over 50 education programs in various fields of study across business, drafting and design, electronics technology, criminal justice, information technology (IT), and Breckinridge School of nursing and health sciences.

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