TrueCar (NASDAQ:TRUE) and Sohu.com (NASDAQ:SOHU) have emerged as notable contenders in the small-cap tech sector, prompting investors to evaluate which company represents a more viable investment opportunity. This comparison delves into various aspects of both firms, including institutional ownership, risk levels, profitability, and analyst recommendations.
Ownership and Institutional Support
Institutional investors hold a significant stake in both companies, with 79.4% of TrueCar’s shares owned by these entities compared to 33.0% for Sohu.com. This disparity indicates a stronger confidence among large investors in TrueCar’s long-term performance. Additionally, 21.1% of Sohu.com shares are held by company insiders, while only 3.9% of TrueCar’s shares are insider-owned. Such figures suggest differing levels of internal confidence and commitment among the management teams.
Volatility and Risk Assessment
When examining volatility, Sohu.com exhibits a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500. Conversely, TrueCar’s beta stands at 2.22, making it 122% more volatile than the broader market. This significant difference suggests that investors should be prepared for more unpredictable price movements with TrueCar, potentially impacting investment decisions.
Profitability and Valuation Metrics
In terms of financial performance, TrueCar reports lower revenue figures but higher earnings per share (EPS) than Sohu.com. The current price-to-earnings ratio for TrueCar is more favorable than that of Sohu.com, indicating that TrueCar may offer a more attractive valuation at this time. Investors often seek stocks with lower P/E ratios, suggesting that TrueCar could be perceived as a more affordable option among the two.
Current analyst ratings further illuminate the outlook for both companies. Sohu.com has a consensus target price of $20.00, which suggests a potential upside of 18.98%. In contrast, TrueCar’s consensus target price is only $2.65, reflecting a more modest potential upside of 4.13%. Analysts generally favor Sohu.com based on these metrics, as evidenced by its stronger consensus rating.
Summary of Key Findings
In summary, Sohu.com surpasses TrueCar in 10 out of 14 evaluated factors, indicating a more favorable investment profile. The analysis of institutional ownership, volatility, profitability, and analyst recommendations collectively suggests that Sohu.com may be the better option for investors seeking growth in the tech sector.
Company Profiles
Sohu.com Limited is a leading provider of online media, video, and gaming services in China. Established in 1996 and headquartered in Beijing, the company operates through multiple platforms, offering news, interactive games, and subscription services across mobile and PC devices. Its diverse portfolio includes the Sohu News APP and Sohu Video APP, catering to a wide audience in the digital space.
On the other hand, TrueCar, Inc., founded in 2005 and based in Santa Monica, California, operates an online platform that provides users with market-based pricing data for new and used cars. TrueCar not only connects consumers with certified dealers but also offers consulting services for automotive loans and leases, thereby playing an essential role in the U.S. automotive market.
Investors must weigh these insights carefully as they consider their options in the competitive landscape of small-cap technology stocks.
