Critical Contrast: CoStar Group (NASDAQ:CSGP) & Netflix (NFLX)

CoStar Group (NASDAQ: CSGP) and Netflix (NASDAQ:NFLX) are both mid-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Risk and Volatility

CoStar Group has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500. Comparatively, Netflix has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for CoStar Group and Netflix, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CoStar Group 0 0 5 0 3.00
Netflix 2 13 27 0 2.60

CoStar Group presently has a consensus price target of $308.00, indicating a potential upside of 10.00%. Netflix has a consensus price target of $175.05, indicating a potential upside of 2.13%. Given CoStar Group’s stronger consensus rating and higher probable upside, analysts clearly believe CoStar Group is more favorable than Netflix.

Institutional & Insider Ownership

82.8% of Netflix shares are owned by institutional investors. 3.0% of CoStar Group shares are owned by insiders. Comparatively, 4.9% of Netflix shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares CoStar Group and Netflix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CoStar Group 10.85% 7.19% 5.49%
Netflix 3.55% 12.82% 2.55%

Earnings & Valuation

This table compares CoStar Group and Netflix’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CoStar Group $894.73 million 10.27 $220.39 million $2.99 93.64
Netflix $10.19 billion 7.26 $706.92 million $0.82 209.02

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

About CoStar Group

CoStar Group, Inc. (CoStar) is a provider of information, analytics and online marketplaces to the commercial real estate and related business community through its database of commercial real estate information covering the United States, the United Kingdom, and parts of Canada, Spain, Germany and France. The Company provides online marketplaces for commercial real estate, apartment rentals, lands for sale and businesses for sale. It manages its business geographically in two segments: North America, which includes the United States and Canada, and International, which includes the United Kingdom, Spain, Germany and France. Its suite of information, analytics and online marketplaces is branded and marketed to its customers. Its services are primarily derived from a database of building-specific information and offer customers specialized tools for accessing, analyzing and using its information. It has five brands: CoStar, LoopNet, Apartments.com, BizBuySell and LandsofAmerica.

About Netflix

Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.

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