Switch (NYSE:SWCH) vs. Line (NYSE:LN) Critical Review

Switch (NYSE:SWCH) and Line (NYSE:LN) are both mid-cap business services companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Dividends

Switch pays an annual dividend of $0.12 per share and has a dividend yield of 0.9%. Line does not pay a dividend. Switch pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

Net Margins Return on Equity Return on Assets
Switch 0.98% 1.27% 0.62%
Line -1.58% -2.52% -1.14%

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Switch 0 4 6 0 2.60
Line 1 2 3 0 2.33

Switch currently has a consensus price target of $12.78, indicating a potential downside of 7.00%. Line has a consensus price target of $3,500.00, indicating a potential upside of 10,783.08%. Given Line’s higher probable upside, analysts plainly believe Line is more favorable than Switch.

Institutional and Insider Ownership

20.3% of Switch shares are owned by institutional investors. Comparatively, 3.3% of Line shares are owned by institutional investors. 28.4% of Switch shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Switch $405.86 million 8.36 $4.05 million $0.09 152.67
Line $2.13 billion 3.60 -$33.83 million ($0.16) -201.00

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

Risk and Volatility

Switch has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Line has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.

Summary

Switch beats Line on 12 of the 16 factors compared between the two stocks.

About Switch

Switch, Inc., through its subsidiary, Switch, Ltd., provides colocation space and related services primarily to technology and digital media companies in the United States. It develops and operates data centers in Nevada and Michigan. The company also serves cloud and managed service providers, financial institutions, IT and software providers, government agencies, network and telecommunications providers, and others that conduct critical business on the Internet. Switch, Inc. was founded in 2000 and is headquartered in Las Vegas, Nevada.

About Line

LINE Corporation provides a platform for mobile messaging and communication services, content distribution, and life and financial services primarily in Japan, Taiwan, Thailand, and Indonesia. It operates through two segments, Core Business and Strategic Business. The company offers LINE, a cross-platform messenger application that enables users to communicate through free instant messaging, stickers, and voice and video calls, as well as serves as a smart portal to its other applications and services. It also provides communication products, including LINE Stickers and themes; and contents, such as LINE Games, LINE PLAY, LINE Manga, LINE Music, and LINE Fortune. In addition, the company offers display advertising services through Timeline, LINE NEWS, and LINE TODAY; account advertising products and services comprising official accounts, [email protected], sponsored stickers, and LINE Point Ads; and other advertising products and services that include LINE Part-time Job, livedoor, and Matome Web portals. Further, it sells LINE characters merchandise under the LINE Friends name; and provides fintech services, such as LINE Pay service, as well as other services that include AI and e-commerce. The company was formerly known as NHN Japan Corporation and changed its name to LINE Corporation in April 2013. The company was founded in 2000 and is headquartered in Tokyo, Japan. LINE Corporation is a subsidiary of Naver Corporation.

Receive News & Ratings for Switch Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Switch and related companies with MarketBeat.com's FREE daily email newsletter.