Critical Review: 58.com (WUBA) versus Switch (SWCH)

58.com (NYSE:WUBA) and Switch (NYSE:SWCH) are both computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.

Volatility and Risk

58.com has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, Switch has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500.

Earnings & Valuation

This table compares 58.com and Switch’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
58.com $1.54 billion 5.43 $211.89 million $1.33 42.92
Switch $378.27 million 4.99 -$15.20 million N/A N/A

58.com has higher revenue and earnings than Switch.

Profitability

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

Net Margins Return on Equity Return on Assets
58.com 16.13% 9.57% 6.66%
Switch -16.29% -1.84% -0.93%

Insider & Institutional Ownership

59.7% of 58.com shares are owned by institutional investors. Comparatively, 19.1% of Switch shares are owned by institutional investors. 11.9% of 58.com shares are owned by company insiders. Comparatively, 12.6% of Switch shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for 58.com and Switch, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
58.com 1 1 3 0 2.40
Switch 0 5 8 0 2.62

58.com presently has a consensus target price of $77.25, indicating a potential upside of 35.34%. Switch has a consensus target price of $14.00, indicating a potential upside of 82.77%. Given Switch’s stronger consensus rating and higher possible upside, analysts plainly believe Switch is more favorable than 58.com.

Dividends

Switch pays an annual dividend of $0.06 per share and has a dividend yield of 0.8%. 58.com does not pay a dividend.

Summary

58.com beats Switch on 8 of the 13 factors compared between the two stocks.

About 58.com

58.com Inc. operates online classifieds and listing platforms that enable local businesses and consumers to connect, share information, and conduct business in the People's Republic of China. It operates multi-content category online classified platforms primarily under the 58 and Ganji names; and Anjuke, an online real estate listing platform. The company's platform provides various content categories, including jobs, real estate, used goods, automotive, yellow pages, and other local services categories. It offers membership services, such as merchant certification and listing benefits, as well as display of online storefronts; and online marketing services comprising real-time bidding, priority listing, various other lead-generation services, and display advertising. The company was founded in 2005 and is headquartered in Beijing, the People's Republic of China.

About Switch

Switch, Inc., through its subsidiary, Switch, Ltd., provides colocation space and related services to technology and digital media companies, cloud and managed service providers, financial institutions, and telecommunications providers that conduct critical business on the Internet. The company develops and operates data centers in Nevada, Michigan, and Georgia. Switch, Inc. was founded in 2000 and is headquartered in Las Vegas, Nevada.

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