Youdao (NYSE:DAO) versus KinderCare Learning Companies (NYSE:KLC) Financial Analysis
by Sarita Garza · The Markets DailyKinderCare Learning Companies (NYSE:KLC – Get Free Report) and Youdao (NYSE:DAO – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.
Volatility and Risk
KinderCare Learning Companies has a beta of 4, meaning that its share price is 300% more volatile than the S&P 500. Comparatively, Youdao has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations for KinderCare Learning Companies and Youdao, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| KinderCare Learning Companies | 4 | 5 | 1 | 0 | 1.70 |
| Youdao | 1 | 0 | 1 | 0 | 2.00 |
KinderCare Learning Companies presently has a consensus target price of $4.13, suggesting a potential upside of 47.98%. Given KinderCare Learning Companies’ higher possible upside, research analysts clearly believe KinderCare Learning Companies is more favorable than Youdao.
Profitability
This table compares KinderCare Learning Companies and Youdao’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| KinderCare Learning Companies | -17.23% | 6.65% | 1.21% |
| Youdao | 1.19% | -4.51% | 4.89% |
Earnings and Valuation
This table compares KinderCare Learning Companies and Youdao”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| KinderCare Learning Companies | $2.73 billion | 0.12 | -$112.88 million | ($3.98) | -0.70 |
| Youdao | $6.01 billion | 0.36 | $15.35 million | $0.09 | 197.33 |
Youdao has higher revenue and earnings than KinderCare Learning Companies. KinderCare Learning Companies is trading at a lower price-to-earnings ratio than Youdao, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
21.9% of Youdao shares are owned by institutional investors. 5.8% of KinderCare Learning Companies shares are owned by company insiders. Comparatively, 43.0% of Youdao 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
Youdao beats KinderCare Learning Companies on 10 of the 13 factors compared between the two stocks.
About KinderCare Learning Companies
KinderCare Learning Companies Inc. is a provider of high-quality early childhood education by center capacity. KinderCare Learning Companies Inc. is based in PORTLAND, Ore.
About Youdao
Youdao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. The company provides various learning content, applications, and solutions, which cover topics and target people from various age groups for their learning needs through its websites and mobile applications. It offers online knowledge tools, which include Youdao and other dictionaries and translation tools; learning services consisting of tutoring, fee-based premium, and other services; STEAM courses, adult and vocational courses, and other courses, such as China University MOOC; smart devices, such as Youdao Dictionary Pen, Youdao Listening Pod, Youdao Smart light, Youdao Pocket Translator, and Youdao Super Dictionary; education digitalization solutions comprising technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, Youdao Sports, and Youdao Smart Cloud; and online marketing services. In addition, the company provides online courses comprising Youdao Premium Courses and NetEase Cloud Classroom, as well as technical support to the variable interest entities (VIEs). Youdao, Inc. was founded in 2006 and is headquartered in Hangzhou, China. Youdao, Inc. is a subsidiary of NetEase, Inc.