Viacom (NASDAQ: VIAB) and Lions Gate Entertainment Corp. (NYSE:LGF) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitabiliy, analyst recommendations and risk.

Institutional and Insider Ownership

77.1% of Viacom shares are owned by institutional investors. Comparatively, 96.7% of Lions Gate Entertainment Corp. shares are owned by institutional investors. 0.4% of Viacom shares are owned by insiders. Comparatively, 30.4% of Lions Gate Entertainment Corp. shares are owned by 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.

Valuation and Earnings

This table compares Viacom and Lions Gate Entertainment Corp.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Viacom $12.91 billion 1.09 $2.89 billion $3.03 11.57
Lions Gate Entertainment Corp. N/A N/A N/A $0.22 118.60

Viacom has higher revenue and earnings than Lions Gate Entertainment Corp.. Viacom is trading at a lower price-to-earnings ratio than Lions Gate Entertainment Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Viacom and Lions Gate Entertainment Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viacom 5 16 9 0 2.13
Lions Gate Entertainment Corp. 0 0 17 0 3.00

Viacom presently has a consensus target price of $43.32, indicating a potential upside of 23.52%. Lions Gate Entertainment Corp. has a consensus target price of $30.25, indicating a potential upside of 15.94%. Given Viacom’s higher possible upside, research analysts plainly believe Viacom is more favorable than Lions Gate Entertainment Corp..

Profitability

This table compares Viacom and Lions Gate Entertainment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viacom 9.32% 32.00% 6.20%
Lions Gate Entertainment Corp. 4.89% 10.25% 2.66%

Dividends

Viacom pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. Lions Gate Entertainment Corp. pays an annual dividend of $0.27 per share and has a dividend yield of 1.0%. Viacom pays out 26.4% of its earnings in the form of a dividend. Lions Gate Entertainment Corp. pays out 122.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Viacom has raised its dividend for 2 consecutive years. Viacom is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Viacom has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500. Comparatively, Lions Gate Entertainment Corp. has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Summary

Viacom beats Lions Gate Entertainment Corp. on 10 of the 14 factors compared between the two stocks.

Viacom Company Profile

Viacom Inc. offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Media Networks segment creates, acquires and distributes programming and other content for audiences The Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.

Lions Gate Entertainment Corp. Company Profile

Lions Gate Entertainment Corp. is engaged in motion picture production and distribution, television programming and syndication, home entertainment, international distribution and sales, branded channel platforms, interactive ventures and games and location-based entertainment. The Company operates through two segments: Motion Pictures and Television Production. The Company’s Motion Pictures segment consists of the development and production of feature films, acquisition of North American and around the world distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and around the world licensing of distribution rights to feature films produced and acquired. The Company’s Television Production segment consists of the development, production and around the world distribution of television productions, including television series, television movies, and mini-series and non-fiction programming.

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