Comparing SEA (NYSE:SE) and Tencent (OTC:TCEHY)

Tencent (OTC:TCEHY) and SEA (NYSE:SE) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tencent	26.41%	19.82%	11.10%
SEA	0.64%	1.40%	0.50%

Insider and Institutional Ownership

0.0% of Tencent shares are held by institutional investors. Comparatively, 59.5% of SEA shares are held by institutional investors. 0.2% of SEA shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Tencent and SEA”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent	$86.17 billion	6.59	$16.28 billion	$2.48	24.81
SEA	$15.49 billion	4.98	$150.73 million	$0.15	898.11

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

Dividends

Tencent pays an annual dividend of $0.38 per share and has a dividend yield of 0.6%. SEA pays an annual dividend of $1.76 per share and has a dividend yield of 1.3%. Tencent pays out 15.3% of its earnings in the form of a dividend. SEA pays out 1,173.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of current ratings and price targets for Tencent and SEA, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	0	0	0	0.00
SEA	1	2	10	1	2.79

SEA has a consensus target price of $91.21, suggesting a potential downside of 32.29%. Given SEA’s stronger consensus rating and higher possible upside, analysts clearly believe SEA is more favorable than Tencent.

Volatility & Risk

Tencent has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500. Comparatively, SEA has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500.

Summary

SEA beats Tencent on 9 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 SEA

Sea Ltd. is an internet and mobile platform company, which engages in the provision of online gaming services. It operates through the following segments: Digital Entertainment, E-Commerce, and Digital Financial Services. The Digital Entertainment segment offers and develops mobile and PC online games. The E-Commerce segment manages a third-party marketplace through the Shopee mobile app and websites that connect buyers and sellers. The Digital Financial Services segment includes a variety of payment services and loans to individuals and businesses through SeaMoney. Sea was founded by Xiao Dong Li, Gang Ye, and Jing Ye Chen on May 8, 2009 and is headquartered in Singapore.