Critical Comparison: Internet Initiative Japan (NASDAQ:IIJI) & Line (NASDAQ:LN)

Internet Initiative Japan (NASDAQ:IIJI) and Line (NYSE:LN) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Insider & Institutional Ownership

0.5% of Internet Initiative Japan shares are owned by institutional investors. Comparatively, 3.3% of Line shares are owned by institutional investors. 6.7% of Internet Initiative Japan shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Internet Initiative Japan and Line, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Internet Initiative Japan 0 0 0 0 N/A
Line 1 2 4 0 2.43

Line has a consensus price target of $3,500.00, suggesting a potential upside of 12,382.17%. Given Line’s higher possible upside, analysts plainly believe Line is more favorable than Internet Initiative Japan.

Dividends

Internet Initiative Japan pays an annual dividend of $0.05 per share and has a dividend yield of 0.5%. Line does not pay a dividend. Internet Initiative Japan pays out 9.6% of its earnings in the form of a dividend. Internet Initiative Japan has increased its dividend for 3 consecutive years.

Risk & Volatility

Internet Initiative Japan has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Line has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Valuation & Earnings

This table compares Internet Initiative Japan and Line’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Internet Initiative Japan $1.59 billion 0.58 $45.98 million $0.52 19.08
Line $2.13 billion 3.14 -$33.83 million ($0.16) -175.25

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

Profitability

This table compares Internet Initiative Japan and Line’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Internet Initiative Japan 2.01% 8.67% 4.11%
Line -1.58% -2.52% -1.14%

Summary

Internet Initiative Japan beats Line on 9 of the 16 factors compared between the two stocks.

About Internet Initiative Japan

Internet Initiative Japan Inc. offers Internet connectivity, WAN, outsourcing, systems integration, and equipment sales services in Japan. It operates in two segments, Network Services and Systems Integration Business, and ATM Operation Business. The company's Internet connectivity services for enterprise include IP services and IIJ data center connectivity services, IIJ FiberAccess/F and IIJ DSL/F services, IIJ mobile services, and dial-up access services, as well as other Internet connectivity services comprising IIJ ISDN/F and IIJ line management/F services. Its Internet connectivity services for consumers consist of various service, including ADSL, fiber optic, WiMAX, 3G, and LTE wireless data communication services under the IIJmio and hi-ho brand names. The company also offers WAN services, a closed network service primarily using dedicated lines, as well as wide-area Ethernet services and IP-VPN services to corporate customers; outsourcing services that comprise security-related, network-related, server-related, data center-related, and IIJ GIO/Hosting package services for non-customizable hosting package cloud computing services; and customer support and help desk solutions, and IP phone services. In addition, it provides systems integration services, which include consulting, project planning, systems design, and development of network systems, which focus on Internet business systems, and Intranet and Extranet corporate information systems; and systems operation and maintenance services. Further, the company sells routers, iPads, and other equipment, as well as software; and provides automated teller machine (ATM) services. As of June 29, 2018, it operated 29 primary points of presence (POP) for dedicated access and 1 universal POP for nationwide dial-up access; 27 Internet data centers; and 1,096 ATMs. The company was founded in 1992 and is headquartered in Tokyo, Japan.

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.

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