Head-To-Head Analysis: Donnelley Financial Solutions (NYSE:DFIN) and Tencent (OTC:TCEHY)

Tencent (OTC:TCEHY) and Donnelley Financial Solutions (NYSE:DFIN) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Valuation & Earnings

This table compares Tencent and Donnelley Financial Solutions”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent	$86.17 billion	6.96	$16.28 billion	$2.85	22.93
Donnelley Financial Solutions	$781.90 million	1.67	$82.20 million	$3.06	14.89

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

Institutional & Insider Ownership

0.0% of Tencent shares are held by institutional investors. Comparatively, 93.8% of Donnelley Financial Solutions shares are held by institutional investors. 11.9% of Donnelley Financial Solutions shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Tencent and Donnelley Financial Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent	0	0	0	0	0.00
Donnelley Financial Solutions	0	0	3	0	3.00

Donnelley Financial Solutions has a consensus price target of $71.33, indicating a potential upside of 56.58%. Given Donnelley Financial Solutions’ stronger consensus rating and higher probable upside, analysts plainly believe Donnelley Financial Solutions is more favorable than Tencent.

Profitability

This table compares Tencent and Donnelley Financial Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent	26.41%	19.82%	11.10%
Donnelley Financial Solutions	11.82%	20.65%	10.41%

Volatility and Risk

Tencent has a beta of 0.16, meaning that its stock price is 84% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 1.44, meaning that its stock price is 44% more volatile than the S&P 500.

Summary

Donnelley Financial Solutions beats Tencent on 8 of the 14 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 Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. provides innovative software and technology-enabled financial regulatory and compliance solutions in the United States, Asia, Europe, Canada, and internationally. It operates through four segments: Capital Markets Software Solutions (CM-SS); Capital Markets Compliance and Communications Management (CM-CCM); Investment Companies Software Solutions (IC-SS); and Investment Companies Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue and ActiveDisclosure solutions to public and private companies to manage public and private transactional and compliance processes; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro, and ArcRegulatory, as well as services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators and investors. The IC-CCM segment offers tech-enabled solutions for creating, filing and distributing regulatory communications, and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant for Investment Company Act through the SEC’s EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.