Critical Review: Changyou.Com (NASDAQ:CYOU) vs. ServiceNow (NASDAQ:NOW)

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Changyou.Com (NASDAQ:CYOU) and ServiceNow (NYSE:NOW) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, earnings, dividends, institutional ownership, profitability, analyst recommendations and risk.

Valuation & Earnings

This table compares Changyou.Com and ServiceNow’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Changyou.Com $485.76 million 1.01 $84.33 million $1.57 5.85
ServiceNow $2.61 billion 21.01 -$26.70 million $0.20 1,477.50

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

Volatility & Risk

Changyou.Com has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, ServiceNow has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Changyou.Com and ServiceNow, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Changyou.Com 0 1 0 0 2.00
ServiceNow 0 3 23 2 2.96

ServiceNow has a consensus price target of $269.63, indicating a potential downside of 8.75%. Given ServiceNow’s stronger consensus rating and higher possible upside, analysts plainly believe ServiceNow is more favorable than Changyou.Com.

Profitability

This table compares Changyou.Com and ServiceNow’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Changyou.Com 28.48% 16.03% 7.46%
ServiceNow -1.38% 1.64% 0.45%

Insider & Institutional Ownership

26.4% of Changyou.Com shares are owned by institutional investors. Comparatively, 93.2% of ServiceNow shares are owned by institutional investors. 1.0% of ServiceNow shares are owned by company 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.

Summary

ServiceNow beats Changyou.Com on 10 of the 15 factors compared between the two stocks.

Changyou.Com Company Profile

Changyou.com Limited develops and operates online games in the People's Republic of China. The company operates through Online Game, Platform Channel, and Cinema Advertising segments. It develops, operates, and licenses online games, including interactive online games that are accessed and played simultaneously by various game players through personal computers; and mobile games played on mobile devices. The company also operates 17173.com Website, an information portal that provides news, electronic forums, online videos, and other information services on online games to game players; and offers various software applications for PCs and mobile devices, as well as purchases pre-film cinema advertising slots from movie theater operators for advertisers. As of December 31, 2018, it had approximately 4.9 million total average monthly active accounts; and 1.6 million total active paying accounts. The company was founded in 2003 and is headquartered in Beijing, the People's Republic of China. Changyou.com Limited is a subsidiary of Sohu.com Limited.

ServiceNow Company Profile

ServiceNow, Inc. provides enterprise cloud computing solutions that define, structure, manage, and automate services for enterprises worldwide. The company offers information technology (IT) service management applications, as well as digital workflow products for customer service, human resources, security operations, integrated risk management, and other enterprise departments. It operates the Now platform that offers workflow automation, electronic service catalogs and portals, configuration management systems, data benchmarking, performance analytics, encryption, and collaboration and development tools. The company also provides IT service management product suite for enterprise's employees, customers, and partners; IT operations management product that connects a customer's physical and cloud-based IT infrastructure with applications and platforms; IT Asset Management product to automate IT asset lifecycles with workflows; IT business management product suite to manage IT priorities; and enterprise development operations product for developers' toolchain. In addition, it offers customer service management product for customer service cases and requests; human resources service delivery product; security operations product for security operations management requirements of third-party; governance, risk, and compliance product to create policies and controls; and field service management application. Further, the company provides professional services, training services and certification programs, and customer support services. It serves enterprises in industries, such as financial services, consumer products, IT services, healthcare, government, education, and technology. The company sells its products through its direct sales team, as well as through resale partners. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.

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