Both Cheetah Mobile Inc. (NYSE:CMCM) and StoneCo Ltd. (NASDAQ:STNE) compete on a level playing field in the Application Software industry. We will evaluate their performance with regards to profitability, analyst recommendations, risk, dividends, institutional ownership, earnings and valuation.

Valuation and Earnings

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cheetah Mobile Inc. 4 -27.96 28.02M 1.54 2.12
StoneCo Ltd. 33 66.20 120.19M 0.63 55.75

Table 1 demonstrates Cheetah Mobile Inc. and StoneCo Ltd.’s gross revenue, earnings per share (EPS) and valuation. StoneCo Ltd. seems to has lower earnings, but higher revenue compared to Cheetah Mobile Inc. The company that is more affordable between the two has a lower price-to-earnings ratio. Cheetah Mobile Inc. is currently more affordable than StoneCo Ltd., because it’s trading at a lower price-to-earnings ratio.

Profitability

Table 2 has Cheetah Mobile Inc. and StoneCo Ltd.’s return on assets, return on equity and net margins.

Net Margins Return on Equity Return on Assets
Cheetah Mobile Inc. 737,368,421.05% 0% 0%
StoneCo Ltd. 360,822,575.80% 15.5% 4.3%

Liquidity

Cheetah Mobile Inc.’s Current Ratio is 3.3 while its Quick Ratio is 3.3. On the competitive side is, StoneCo Ltd. which has a 1.8 Current Ratio and a 1.8 Quick Ratio. Cheetah Mobile Inc. is better positioned to pay off short and long-term obligations compared to StoneCo Ltd.

Analyst Ratings

The next table highlights the given recommendations and ratings for Cheetah Mobile Inc. and StoneCo Ltd.

Sell Ratings Hold Ratings Buy Ratings Rating Score
Cheetah Mobile Inc. 1 0 0 1.00
StoneCo Ltd. 1 1 3 2.60

Cheetah Mobile Inc.’s downside potential currently stands at -17.38% and an $2.9 consensus price target. Competitively the consensus price target of StoneCo Ltd. is $31.8, which is potential -8.04% downside. The data provided earlier shows that StoneCo Ltd. appears more favorable than Cheetah Mobile Inc., based on analyst view.

Insider and Institutional Ownership

Roughly 16.4% of Cheetah Mobile Inc. shares are owned by institutional investors while 77% of StoneCo Ltd. are owned by institutional investors. About 16.14% of Cheetah Mobile Inc.’s share are owned by insiders. Competitively, insiders own roughly 26.68% of StoneCo Ltd.’s shares.

Performance

Here are the Weekly, Monthly, Quarterly, Half Yearly, Yearly and YTD Performance of both pretenders.

Performance (W) Performance (M) Performance (Q) Performance (HY) Performance (Y) Performance (YTD)
Cheetah Mobile Inc. -1.81% -9.44% -47.42% -50.53% -60.24% -46.64%
StoneCo Ltd. 5.1% 21.23% 29.67% 63.14% 0% 89.86%

For the past year Cheetah Mobile Inc. had bearish trend while StoneCo Ltd. had bullish trend.

Summary

On 11 of the 15 factors StoneCo Ltd. beats Cheetah Mobile Inc.

Cheetah Mobile Inc. operates a platform that offers mobile and personal computer (PC) applications for its users and global content promotional channels. The companyÂ’s suite of utility applications optimizes mobile and PC Internet system performance and provides real time protection against known and unknown security threats. Its mobile and PC applications for users include Clean Master, a junk file cleaning, memory boosting, and privacy protection tool for mobile devices; CM Security, an anti-virus and security application for mobile devices; Battery Doctor, a power optimization tool for mobile devices; Cheetah Browser, a safe Web browser for PCs and mobile devices; CM Browser, a mobile browser; CM Launcher, a secure launcher that offers acceleration, secure protection, and stylish wallpapers, as well as automatically organizes mobile applications based on personal behavior; Photo Grid, a photo collage application that allows users to create professional looking collages of photos through an intuitive interface for mobile devices; CM Locker, a lightweight lock screen; and Duba Anti-virus, an Internet security application for PC and mobile devices. The company also offers content-driven applications comprising Live.me, a live video streaming application; and News Republic, a global mobile news service operator, as well as various products, which include mobile advertising publishing; mobile advertising platform; Duba.com personal start page that aggregates online resources and provides users access to their online destinations; Web and mobile games publishing; and cloud-based data analytics engines. It serves direct advertisers, including mobile application developers, mobile game developers, and e-commerce companies, as well as search engines. The company was formerly known as Kingsoft Internet Software Holdings Limited and changed its name to Cheetah Mobile Inc. in March 2014. Cheetah Mobile Inc. was incorporated in 2009 and is headquartered in Beijing, China.

StoneCo Ltd. provides financial technology solutions that empower merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and technology and solutions to digital merchants through sales and technical personnel and software vendors. As of June 30, 2018, the company served approximately 200,000 clients, which included digital, and brick-and-mortar merchants, primarily small-and-medium-sized businesses; and 95 integrated partners, such as global payment service providers, digital marketplaces, and integrated software vendors. The company was founded in 2012 and is headquartered in São Paulo, Brazil.

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