Head to Head Comparison: Tencent (OTCMKTS:TCEHY) vs. HealthStream (NASDAQ:HSTM)

Tencent (OTCMKTS:TCEHY) and HealthStream (NASDAQ:HSTM) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Tencent and HealthStream, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	2	2	0	2.50
HealthStream	1	2	0	0	1.67

Tencent currently has a consensus target price of $102.00, indicating a potential upside of 66.67%. HealthStream has a consensus target price of $25.00, indicating a potential upside of 20.66%. Given Tencent’s stronger consensus rating and higher probable upside, research analysts plainly believe Tencent is more favorable than HealthStream.

Institutional & Insider Ownership

0.0% of Tencent shares are owned by institutional investors. Comparatively, 69.6% of HealthStream shares are owned by institutional investors. 20.4% of HealthStream shares are owned by company 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.

Dividends

Tencent pays an annual dividend of $0.50 per share and has a dividend yield of 0.8%. HealthStream pays an annual dividend of $0.14 per share and has a dividend yield of 0.7%. Tencent pays out 14.8% of its earnings in the form of a dividend. HealthStream pays out 23.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. HealthStream has increased its dividend for 2 consecutive years. Tencent is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Tencent and HealthStream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent	29.92%	18.98%	11.39%
HealthStream	6.03%	5.98%	4.14%

Risk & Volatility

Tencent has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500. Comparatively, HealthStream has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent	$104.58 billion	5.34	$31.28 billion	$3.38	18.11
HealthStream	$304.06 million	2.00	$18.34 million	$0.61	33.97

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

Summary

Tencent beats HealthStream on 12 of the 17 factors compared between the two stocks.

About Tencent

Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.

About HealthStream

HealthStream, Inc. provides Software-as-a-Service (SaaS) based applications for healthcare organizations in the United States. The company’s solutions help healthcare organizations in meeting their ongoing clinical development, talent management, training, education, assessment, competency management, safety and compliance, and scheduling, as well as provider credentialing, privileging, and enrollment needs. It offers hStream, a technology platform that powers a range of healthcare workforce solutions. The company provides its solutions to customers across a range of entities within the healthcare industry, including private, not-for-profit, and government entities, as well as pharmaceutical and medical device companies through its direct sales teams. The company was incorporated in 1990 and is headquartered in Nashville, Tennessee.