Head-To-Head Analysis: Youdao (NYSE:DAO) vs. Bright Horizons Family Solutions (NYSE:BFAM)
by Sarita Garza · The Markets DailyBright Horizons Family Solutions (NYSE:BFAM – Get Free Report) and Youdao (NYSE:DAO – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.
Volatility & Risk
Bright Horizons Family Solutions has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, Youdao has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500.
Profitability
This table compares Bright Horizons Family Solutions and Youdao’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Bright Horizons Family Solutions | 5.78% | 20.09% | 6.35% |
| Youdao | 2.71% | -8.46% | 8.78% |
Analyst Recommendations
This is a breakdown of current recommendations and price targets for Bright Horizons Family Solutions and Youdao, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Bright Horizons Family Solutions | 2 | 3 | 4 | 0 | 2.22 |
| Youdao | 1 | 0 | 1 | 0 | 2.00 |
Bright Horizons Family Solutions presently has a consensus target price of $95.62, indicating a potential upside of 45.04%. Youdao has a consensus target price of $22.00, indicating a potential upside of 48.45%. Given Youdao’s higher probable upside, analysts plainly believe Youdao is more favorable than Bright Horizons Family Solutions.
Valuation and Earnings
This table compares Bright Horizons Family Solutions and Youdao”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Bright Horizons Family Solutions | $2.93 billion | 1.09 | $193.12 million | $3.16 | 20.86 |
| Youdao | $822.04 million | 2.17 | $15.35 million | $0.20 | 74.10 |
Bright Horizons Family Solutions has higher revenue and earnings than Youdao. Bright Horizons Family Solutions is trading at a lower price-to-earnings ratio than Youdao, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
21.9% of Youdao shares are owned by institutional investors. 1.4% of Bright Horizons Family Solutions shares are owned by insiders. Comparatively, 43.0% of Youdao shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
Bright Horizons Family Solutions beats Youdao on 8 of the 14 factors compared between the two stocks.
About Bright Horizons Family Solutions
Bright Horizons Family Solutions Inc. provides early education and childcare, back-up care, educational advisory, and other workplace solutions services for employers and families in the United States, Puerto Rico, the United Kingdom, the Netherlands, Australia, and India. The company operates in three segments: Full Service Center-Based Child Care, Back-Up Care, and Educational Advisory and Other Services. The Full Service Center-Based Child Care segment offers traditional center-based child care and early education, preschool, and elementary education services. The Back-Up Care segment provides center-based back-up child care, in-home child and adult/elder dependent care, school-age camps, virtual tutoring, and self-sourced reimbursed care services through child care centers, school-age campuses, and in-home caregivers, as well as the back-up care network. The Educational Advisory and Other Services segment offers tuition assistance and student loan repayment program administration, workforce education, and related educational consulting services, as well as college admissions and college financial advisory services. The company was formerly known as Bright Horizons Solutions Corp. and changed its name to Bright Horizons Family Solutions Inc. in July 2012. Bright Horizons Family Solutions Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.
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.