China Distance Education Holdings Limited (NYSE: DL) and Houghton Mifflin Harcourt (NASDAQ:HMHC) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitabiliy, earnings, valuation, analyst recommendations, risk, institutional ownership and dividends.
Analyst Ratings
This is a summary of recent ratings and price targets for China Distance Education Holdings Limited and Houghton Mifflin Harcourt, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| China Distance Education Holdings Limited | 1 | 0 | 1 | 0 | 2.00 |
| Houghton Mifflin Harcourt | 0 | 2 | 1 | 1 | 2.75 |
China Distance Education Holdings Limited currently has a consensus target price of $14.00, indicating a potential upside of 100.00%. Houghton Mifflin Harcourt has a consensus target price of $17.88, indicating a potential upside of 53.43%. Given China Distance Education Holdings Limited’s higher probable upside, equities research analysts plainly believe China Distance Education Holdings Limited is more favorable than Houghton Mifflin Harcourt.
Institutional and Insider Ownership
19.7% of China Distance Education Holdings Limited shares are held by institutional investors. 1.3% of Houghton Mifflin Harcourt shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares China Distance Education Holdings Limited and Houghton Mifflin Harcourt’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| China Distance Education Holdings Limited | 20.98% | 49.30% | 15.47% |
| Houghton Mifflin Harcourt | -17.29% | -12.53% | -4.08% |
Volatility & Risk
China Distance Education Holdings Limited has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500. Comparatively, Houghton Mifflin Harcourt has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.
Earnings and Valuation
This table compares China Distance Education Holdings Limited and Houghton Mifflin Harcourt’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| China Distance Education Holdings Limited | $122.87 million | 1.88 | $30.69 million | $0.78 | 8.97 |
| Houghton Mifflin Harcourt | $1.39 billion | 1.03 | $45.54 million | ($1.96) | -5.94 |
Houghton Mifflin Harcourt has higher revenue and earnings than China Distance Education Holdings Limited. Houghton Mifflin Harcourt is trading at a lower price-to-earnings ratio than China Distance Education Holdings Limited, indicating that it is currently the more affordable of the two stocks.
Dividends
China Distance Education Holdings Limited pays an annual dividend of $0.45 per share and has a dividend yield of 6.4%. Houghton Mifflin Harcourt does not pay a dividend. China Distance Education Holdings Limited pays out 57.7% of its earnings in the form of a dividend. China Distance Education Holdings Limited has raised its dividend for 2 consecutive years.
Summary
China Distance Education Holdings Limited beats Houghton Mifflin Harcourt on 10 of the 16 factors compared between the two stocks.
About China Distance Education Holdings Limited
China Distance Education Holdings Limited is a holding company. The Company is engaged in providing online and offline education services, and selling related products in the People’s Republic of China (PRC). The Company’s segments include online education services, business start-up training services and the sale of learning simulation software. The Company primarily sells books and reference materials related to its courses, such as the various levels of Accounting Professional Qualification Examinations, accounting continuing education, the National Practicing Medical Doctor Qualification Examination, the National Pharmacist Qualification Examination, and Associate Constructor and Constructor Qualification Examinations. It offers college oriented online-to-offline products and services, business start-up training courses and others. The Company had a content library with 263 course offerings of audio-video content, as of September 30, 2016.
About Houghton Mifflin Harcourt
Houghton Mifflin Harcourt Company (HMH) is a global learning company, specializing in education solutions across a range of media. The Company operates through two segments: Education and Trade Publishing. As of December 31, 2016, the Company delivered content, services and technology to both educational institutions and consumers, reaching over 50 million students in approximately 150 countries across the world. It sells its products and services across multiple media and distribution channels. Its Education segment provides educational content, services and technology solutions to meet the diverse needs of classrooms. Its Trade Publishing segment develops, markets and sells consumer books in print and digital formats, and licenses book rights to other publishers and electronic businesses in the United States and abroad.
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