Reviewing iQIYI (NASDAQ:IQ) and Xunlei (NASDAQ:XNET)

iQIYI (NASDAQ:IQ) and Xunlei (NASDAQ:XNET) are both small-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

52.7% of iQIYI shares are held by institutional investors. Comparatively, 5.1% of Xunlei shares are held by institutional investors. 57.8% of iQIYI shares are held by company insiders. Comparatively, 21.7% of Xunlei shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for iQIYI and Xunlei, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
iQIYI	2	1	2	0	2.00
Xunlei	0	1	0	0	2.00

iQIYI presently has a consensus target price of $2.55, indicating a potential upside of 152.15%. Given iQIYI’s higher possible upside, equities analysts clearly believe iQIYI is more favorable than Xunlei.

Profitability

This table compares iQIYI and Xunlei’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
iQIYI	-2.61%	-4.72%	-1.36%
Xunlei	185.71%	1.47%	1.24%

Volatility and Risk

iQIYI has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500. Comparatively, Xunlei has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Earnings and Valuation

This table compares iQIYI and Xunlei”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
iQIYI	$3.80 billion	0.26	-$29.50 million	($0.10)	-10.10
Xunlei	$462.41 million	0.67	$1.05 billion	$13.67	0.36

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

Summary

Xunlei beats iQIYI on 8 of the 13 factors compared between the two stocks.

About iQIYI

iQIYI, Inc., together with its subsidiaries, provides online entertainment video services in the People's Republic of China. It offers various products and services, including online video, online games, online literature, animations, and other products. The company operates a platform that provides a collection of internet video content, such as professionally produced content licensed from professional content providers and self-produced content. It also offers membership, online advertising, content distribution, and live broadcasting services. In addition, the company operates iQIYI Show, a live broadcasting platform that enables users to follow their favorite hosts and shows in real time through live broadcasting; and iQIYI Lite that offers an easy and quick access to the personalized videos based on their user preferences. Further, it is involved in the talent agency and IP licensing activities, as well as engages in developing a video community app. The company was formerly known as Qiyi.com, Inc. and changed its name to iQIYI, Inc. in November 2017. iQIYI, Inc. was incorporated in 2009 and is headquartered in Beijing, China. iQIYI, Inc. is a subsidiary of Baidu, Inc.

About Xunlei

Xunlei Limited, together with its subsidiaries, operates an internet platform for digital media content in the People's Republic of China. Its platform is based on cloud technology that enables users to access, store, manage, and consume digital media content. The company offers Xunlei Accelerator, which enables users to accelerate digital transmission over the internet; mobile acceleration plug-in, which provides mobile device users with benefits of download speed acceleration and download success rate improvements; and subscription services that offer users premium services through Green Channel and Fast Bird products. It also provides Mobile Xunlei, a mobile application that allows users to search, download, consume, and store digital media content; Xunlei Media Player, which supports online and offline play of digital media content, as well as simultaneous play of digital media content while it is being transmitted by Xunlei Accelerator; online games through online game website and mobile app; advertising services; live streaming products, including video and audio livestreaming; and develops software and computer software, as well as other internet value-added services. In addition, the company offers cloud computing services through OneThing Cloud, and StellarCloud; and hardware for edging computing, such as OneThing Edge Cube, and OneThing Edge Atom. Further it offers ThunderChain, a blockchain infrastructure product that enables its users to develop and manage blockchain applications. The company was formerly known as Giganology Limited and changed its name to Xunlei Limited in January 2011. Xunlei Limited was founded in 2003 and is headquartered in Shenzhen, the People's Republic of China.