58.com (WUBA) versus Connecture (CNXR) Critical Review

58.com (NYSE: WUBA) and Connecture (OTCMKTS:CNXR) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Insider & Institutional Ownership

60.9% of 58.com shares are held by institutional investors. Comparatively, 38.8% of Connecture shares are held by institutional investors. 68.6% of Connecture shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares 58.com and Connecture’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
58.com $1.14 billion 8.84 -$110.71 million $0.74 93.15
Connecture $81.89 million 0.04 -$26.53 million ($0.92) -0.14

Connecture has lower revenue, but higher earnings than 58.com. Connecture is trading at a lower price-to-earnings ratio than 58.com, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

58.com has a beta of 2.15, indicating that its share price is 115% more volatile than the S&P 500. Comparatively, Connecture has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for 58.com and Connecture, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
58.com 3 3 5 0 2.18
Connecture 0 0 0 0 N/A

58.com presently has a consensus price target of $50.63, suggesting a potential downside of 26.56%. Given 58.com’s higher possible upside, equities research analysts plainly believe 58.com is more favorable than Connecture.

Profitability

This table compares 58.com and Connecture’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
58.com 7.93% 4.08% 2.80%
Connecture -19.38% N/A -17.70%

Summary

58.com beats Connecture on 10 of the 12 factors compared between the two stocks.

58.com Company Profile

58.com Inc. is a holding company. The Company’s business consists of its online classifieds and listing platforms. Its online classifieds and listings platforms enable local merchants and consumers to connect, share information and conduct business in China. These platforms include 58, Ganji and Anjuke. 58 and Ganji are online multi-content category-classified advertising platforms, while Anjuke is an online real estate listing platform. In addition, 58 Daojia Inc., its subsidiary, operates a mobile-based closed-loop transactional platform for home services, which directly connects consumers and individual service providers for local services, such as home cleaning, moving services and manicure services provided at home. Its classifieds and listing platforms contain local information for over 480 cities across various content categories, including jobs, real estate, used goods, automotive and yellow pages. It also offers membership, online marketing services and e-commerce services.

Connecture Company Profile

Connecture, Inc. provides a Web-based consumer shopping, enrollment and retention platform for health insurance distribution. The Company caters its services to health insurance marketplace operators, such as health plans, brokers and exchange operators. It operates through four segments: Enterprise/Commercial, Enterprise/State, Medicare and Private Exchange. The Enterprise/Commercial segment offers insurance distribution solutions to health plans. The Enterprise/State segment offers the sales automation solutions to state Governments, which allow its customers to offer customized individual and small group exchanges. The Medicare segment offers Web-based Medicare plan comparison, prescription drug comparison and enrollment tools for health plans, pharmacy benefit managers, pharmacies, field marketing organizations and call centers. The Private Exchange segment offers defined-contribution benefit exchange solutions to benefit consultants, brokers, exchange operators and aggregators.

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