Sirius XM Holdings (NASDAQ: SIRI) and Salem Media Group (NASDAQ:SALM) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitabiliy and analyst recommendations.

Earnings and Valuation

This table compares Sirius XM Holdings and Salem Media Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sirius XM Holdings $5.11 billion 4.75 $1.80 billion $0.15 34.67
Salem Media Group $274.73 million 0.69 $46.50 million $0.36 20.14

Sirius XM Holdings has higher revenue and earnings than Salem Media Group. Salem Media Group is trading at a lower price-to-earnings ratio than Sirius XM Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sirius XM Holdings and Salem Media Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sirius XM Holdings 15.24% -104.00% 9.58%
Salem Media Group 3.49% 6.42% 2.32%

Institutional & Insider Ownership

22.2% of Sirius XM Holdings shares are owned by institutional investors. Comparatively, 29.7% of Salem Media Group shares are owned by institutional investors. 1.1% of Sirius XM Holdings shares are owned by insiders. Comparatively, 60.0% of Salem Media Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Sirius XM Holdings pays an annual dividend of $0.04 per share and has a dividend yield of 0.8%. Salem Media Group pays an annual dividend of $0.26 per share and has a dividend yield of 3.6%. Sirius XM Holdings pays out 26.7% of its earnings in the form of a dividend. Salem Media Group pays out 72.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Sirius XM Holdings and Salem Media Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sirius XM Holdings 1 8 6 0 2.33
Salem Media Group 0 0 0 0 N/A

Sirius XM Holdings presently has a consensus price target of $5.27, suggesting a potential upside of 1.25%. Given Sirius XM Holdings’ higher probable upside, equities research analysts clearly believe Sirius XM Holdings is more favorable than Salem Media Group.

Risk & Volatility

Sirius XM Holdings has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, Salem Media Group has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Summary

Sirius XM Holdings beats Salem Media Group on 9 of the 15 factors compared between the two stocks.

About Sirius XM Holdings

Sirius XM Radio Inc. broadcasts its music, sports, entertainment, comedy, talk, news, traffic and weather channels in the United States on a subscription fee basis through its two satellite radio systems. Subscribers can also receive certain of its music and other channels over the Internet, including through applications for mobile devices. As of December 31, 2011, it had 21,892,824 subscribers. Its subscribers include subscribers under its regular and discounted pricing plans; subscribers that have prepaid, including payments made or due from automakers for subscriptions included in the sale or lease price of a vehicle; radios activated for daily rental fleet programs, and subscribers to its Internet services who do not also have satellite radio subscriptions. In January 2013, Liberty Media Corporation announced it held 50.7% interest of the Company.

About Salem Media Group

Salem Media Group, Inc., formerly Salem Communications Corporation, is a multi-media company specializing in Christian and Conservative content, with media properties consisting of radio broadcasting, digital media, and book, magazine and newsletter publishing. The Company operates through three segments: Broadcast, Digital Media and Publishing. The Company’s broadcasting segment is engaged in the ownership and operation of radio stations in metropolitan markets. The Company’s radio stations carry national and local programming content, as well as national and local advertisers. The Company’s Digital Media segment focuses on Web-based platform designed for audiences interested in Christian and family-themed content and conservative news. The Company’s publishing segment consists of Regnery Publishing, Xulon Press and Salem Publishing. The Company owns and operates approximately 116 radio stations in over 40 markets.

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