Hewlett Packard Enterprise (NYSE:HPE) and NetEase (NASDAQ:NTES) are both large-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, institutional ownership, earnings and profitability.
Dividends
Hewlett Packard Enterprise pays an annual dividend of $0.48 per share and has a dividend yield of 3.3%. NetEase pays an annual dividend of $0.77 per share and has a dividend yield of 0.7%. Hewlett Packard Enterprise pays out 35.6% of its earnings in the form of a dividend. NetEase pays out 26.3% 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. Hewlett Packard Enterprise has increased its dividend for 1 consecutive years. Hewlett Packard Enterprise is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
81.3% of Hewlett Packard Enterprise shares are owned by institutional investors. 0.4% of Hewlett Packard Enterprise shares are owned by company insiders. Comparatively, 54.7% of NetEase shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Profitability
This table compares Hewlett Packard Enterprise and NetEase's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Hewlett Packard Enterprise | -1.19% | 10.73% | 3.22% |
| NetEase | 20.47% | 19.03% | 10.97% |
Valuation and Earnings
This table compares Hewlett Packard Enterprise and NetEase's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Hewlett Packard Enterprise | $26.98 billion | 0.70 | $-322,000,000.00 | $1.35 | 10.74 |
| NetEase | $8.51 billion | 8.43 | $3.09 billion | $2.93 | 37.59 |
NetEase has lower revenue, but higher earnings than Hewlett Packard Enterprise. Hewlett Packard Enterprise is trading at a lower price-to-earnings ratio than NetEase, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current ratings and price targets for Hewlett Packard Enterprise and NetEase, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Hewlett Packard Enterprise | 2 | 10 | 6 | 0 | 2.22 |
| NetEase | 0 | 0 | 10 | 0 | 3.00 |
Hewlett Packard Enterprise currently has a consensus price target of $11.7222, indicating a potential downside of 19.16%. NetEase has a consensus price target of $106.30, indicating a potential downside of 3.48%. Given NetEase's stronger consensus rating and higher probable upside, analysts clearly believe NetEase is more favorable than Hewlett Packard Enterprise.
Volatility and Risk
Hewlett Packard Enterprise has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, NetEase has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.
Summary
NetEase beats Hewlett Packard Enterprise on 12 of the 17 factors compared between the two stocks.
