Head-To-Head Comparison: Youdao (DAO) versus Its Competitors

Youdao (NYSE:DAO) is one of 166 publicly-traded companies in the “Diversified Consumer Services” industry, but how does it contrast to its peers? We will compare Youdao to similar businesses based on the strength of its analyst recommendations, valuation, earnings, institutional ownership, dividends, profitability and risk.

Insider and Institutional Ownership

21.9% of Youdao shares are owned by institutional investors. Comparatively, 48.4% of shares of all “Diversified Consumer Services” companies are owned by institutional investors. 43.0% of Youdao shares are owned by company insiders. Comparatively, 20.2% of shares of all “Diversified Consumer Services” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Youdao has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500. Comparatively, Youdao’s peers have a beta of 0.47, meaning that their average stock price is 53% less volatile than the S&P 500.

Profitability

This table compares Youdao and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Youdao	2.71%	-8.46%	8.78%
Youdao Competitors	-3.16%	-28.48%	2.42%

Earnings & Valuation

This table compares Youdao and its peers revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Youdao	$822.04 million	$15.35 million	94.88
Youdao Competitors	$3.53 billion	$219.82 million	11.99

Youdao’s peers have higher revenue and earnings than Youdao. Youdao is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a summary of current ratings and recommmendations for Youdao and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Youdao	0	1	1	0	2.50
Youdao Competitors	1427	3417	5265	193	2.41

Youdao presently has a consensus target price of $22.00, suggesting a potential upside of 15.94%. As a group, “Diversified Consumer Services” companies have a potential upside of 63.47%. Given Youdao’s peers higher possible upside, analysts clearly believe Youdao has less favorable growth aspects than its peers.

Summary

Youdao beats its peers on 7 of the 13 factors compared.

About Youdao

Youdao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. The company provides various learning content, applications, and solutions, which cover topics and target people from various age groups for their learning needs through its websites and mobile applications. It offers online knowledge tools, which include Youdao and other dictionaries and translation tools; learning services consisting of tutoring, fee-based premium, and other services; STEAM courses, adult and vocational courses, and other courses, such as China University MOOC; smart devices, such as Youdao Dictionary Pen, Youdao Listening Pod, Youdao Smart light, Youdao Pocket Translator, and Youdao Super Dictionary; education digitalization solutions comprising technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, Youdao Sports, and Youdao Smart Cloud; and online marketing services. In addition, the company provides online courses comprising Youdao Premium Courses and NetEase Cloud Classroom, as well as technical support to the variable interest entities (VIEs). Youdao, Inc. was founded in 2006 and is headquartered in Hangzhou, China. Youdao, Inc. is a subsidiary of NetEase, Inc.