Bitauto (NYSE:BITA) and FRONTEO (NASDAQ:FTEO) are both small-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, valuation, analyst recommendations, risk, earnings, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Bitauto and FRONTEO, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bitauto 0 1 2 0 2.67
FRONTEO 0 0 0 0 N/A

Bitauto currently has a consensus target price of $18.33, suggesting a potential upside of 22.63%. Given Bitauto’s higher probable upside, analysts plainly believe Bitauto is more favorable than FRONTEO.

Earnings & Valuation

This table compares Bitauto and FRONTEO’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bitauto $1.54 billion 0.71 -$87.68 million $1.40 10.68
FRONTEO $101.88 million 0.97 $1.96 million N/A N/A

FRONTEO has lower revenue, but higher earnings than Bitauto.

Risk & Volatility

Bitauto has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, FRONTEO has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500.

Insider and Institutional Ownership

23.6% of Bitauto shares are held by institutional investors. 17.0% of Bitauto shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Bitauto and FRONTEO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bitauto -4.86% 2.95% 1.01%
FRONTEO -4.66% -12.78% -4.32%

Summary

Bitauto beats FRONTEO on 7 of the 11 factors compared between the two stocks.

About Bitauto

Bitauto Holdings Limited, through its subsidiaries, provides Internet content and marketing services, and transaction services for the automobile industry in the People’s Republic of China. It operates in three segments: Advertising and Subscription Business, Transaction Services Business, and Digital Marketing Solutions Business. The Advertising and Subscription Business segment offers advertising services, including automobile pricing and promotional information, specifications, reviews, and consumer feedback to automakers through its bitauto.com Website and related mobile applications. It also provides transaction-focused online advertisement and promotional services for automakers, automobile dealers, auto finance partners, and insurance companies; and Web-based and mobile-based integrated digital marketing solutions to automobile dealers. The Transaction Services Business segment operates an online automobile retail transaction platform, which provides transaction platform and self-operated financing services. The Digital Marketing Solutions Business segment offers one-stop digital marketing solutions, including Website creation and maintenance, online public relation, online marketing campaign, advertising agency, big data application, and digital image creation services for automakers. The company also distributes its dealer customers’ automobile pricing and promotional information through its Internet service provider partners. Bitauto Holdings Limited was founded in 2000 and is headquartered in Beijing, the People’s Republic of China.

About FRONTEO

FRONTEO, Inc. provides Asian-language eDiscovery solutions and services primarily in the United States, Europe, and Asia. The company operates in two segments, Legal Tech Services and Artificial Intelligence (AI) Solutions Services. It has eDiscovery and forensic information documented in Japanese, Korean, Chinese, and English. The company assists clients involved in cross-border litigation, administrative proceedings, and internal investigations, including those related to antitrust investigations, intellectual property litigation, the Foreign Corrupt Practices Act, and product liability investigations. It also provides Lit i View, an online eDiscovery software, which handles Asian-language characters, encoding schemes, and native file systems; and Intelligence Cloud solution to maintain client data during and after a particular litigation or investigation, and data and documents in a relational database of its clients’ data and documents. In addition, the company offers electronic data forensic investigation solutions and services that enables the preservation, analysis, processing, and production of electronically stored information in connection with fraud and corporate information leakage; forensic tools; and Lit i View XAMINER, a digital forensic software, and other related hardware and software products. Further, it helps to create document management procedures; conduct corporate risk audits; and comply with legal requirements to provide information to stakeholders. Additionally, the company provides AI solutions in the fields of business intelligence, healthcare, and digital communications. It serves enterprises, government agencies, law firms, and other organizations under the FRONTEO, KIBIT, and Landscaping brands. The company was formerly known as UBIC, Inc. and changed its name to FRONTEO, Inc. in July 2016. FRONTEO, Inc. was founded in 2003 and is headquartered in Tokyo, Japan.

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