Critical Review: Zhangmen Education (NYSE:ZME) and China Online Education Group (NYSE:COE)

China Online Education Group (NYSE:COE) and Zhangmen Education (NYSE:ZME) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Profitability

This table compares China Online Education Group and Zhangmen Education’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Online Education Group 4.77% -11.84% 5.00%
Zhangmen Education N/A N/A N/A

Institutional & Insider Ownership

39.4% of China Online Education Group shares are owned by institutional investors. Comparatively, 10.6% of Zhangmen Education shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for China Online Education Group and Zhangmen Education, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Online Education Group 0 1 1 0 2.50
Zhangmen Education 0 1 1 0 2.50

China Online Education Group currently has a consensus target price of $32.00, indicating a potential upside of 959.60%. Zhangmen Education has a consensus target price of $15.00, indicating a potential upside of 364.40%. Given China Online Education Group’s higher possible upside, research analysts clearly believe China Online Education Group is more favorable than Zhangmen Education.

Valuation & Earnings

This table compares China Online Education Group and Zhangmen Education’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Online Education Group $314.80 million 0.21 $22.52 million N/A N/A
Zhangmen Education $613.33 million 0.83 -$154.51 million N/A N/A

China Online Education Group has higher earnings, but lower revenue than Zhangmen Education.

Summary

China Online Education Group beats Zhangmen Education on 5 of the 8 factors compared between the two stocks.

China Online Education Group Company Profile

China Online Education Group engages in the operation of an online education platform in China. Its online and mobile education platforms enable students across China to take live interactive english lessons with overseas foreign teachers, on demand. The company was founded by Jia Jia Huang, Ting Shu, and Li Ming Zhang in November 2012 and is headquartered in Beijing, China.

Zhangmen Education Company Profile

Zhangmen Education Inc., online education company, provides personalized online courses to K-12 students in the People's Republic of China. It offers one-on-one and small-class after-school tutoring services covering all K-12 academic subjects to students between 3 and 18. The company was formerly known as Global Online Education Inc. and changed its name to Zhangmen Education Inc. in April 2021. Zhangmen Education Inc. was founded in 2014 and is headquartered in Shanghai, the People's Republic of China.

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