Lions Gate Entertainment Corp. (NYSE: LGF) and Taomee Holdings (NYSE:TAOM) are both cyclical consumer goods & services companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitabiliy, earnings, dividends and institutional ownership.

Insider and Institutional Ownership

96.7% of Lions Gate Entertainment Corp. shares are held by institutional investors. 30.4% of Lions Gate Entertainment Corp. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Lions Gate Entertainment Corp. and Taomee Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lions Gate Entertainment Corp. 0 1 15 0 2.94
Taomee Holdings 0 0 0 0 N/A

Lions Gate Entertainment Corp. currently has a consensus target price of $30.56, suggesting a potential upside of 17.14%. Given Lions Gate Entertainment Corp.’s higher possible upside, equities research analysts clearly believe Lions Gate Entertainment Corp. is more favorable than Taomee Holdings.

Earnings & Valuation

This table compares Lions Gate Entertainment Corp. and Taomee Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lions Gate Entertainment Corp. N/A N/A N/A $0.22 118.60
Taomee Holdings N/A N/A N/A N/A N/A

Profitability

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

Net Margins Return on Equity Return on Assets
Lions Gate Entertainment Corp. 4.89% 10.25% 2.66%
Taomee Holdings 2.06% -0.90% 0.75%

Dividends

Lions Gate Entertainment Corp. pays an annual dividend of $0.27 per share and has a dividend yield of 1.0%. Taomee Holdings does not pay 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. Lions Gate Entertainment Corp. has increased its dividend for 2 consecutive years.

Summary

Lions Gate Entertainment Corp. beats Taomee Holdings on 9 of the 10 factors compared between the two stocks.

About Lions Gate Entertainment Corp.

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.

About Taomee Holdings

Taomee Holdings Limited is a children’s entertainment and media company in China. The Company is engaged in developing branded entertainment experiences across online and mobile platforms. It has developed branded entertainment franchises, including its major franchises of Mole’s World, Seer and Flower Angel. In addition, the Company also operates the franchise of Canimals in China. The Company’s brands and franchises have expanded into various online and offline platforms, including the virtual worlds, video streaming site, mobile games and applications, social networking, films and cartoon animations, merchandising and toys. The Company provides a portfolio of services and products through two business segments: online business and offline business.

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