Analyzing Discovery Communications (DISCK) & Nexstar Broadcasting Group (NXST)
Discovery Communications (NASDAQ: DISCK) and Nexstar Broadcasting Group (NASDAQ:NXST) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitabiliy, valuation, analyst recommendations, risk, institutional ownership and dividends.
Earnings and Valuation
This table compares Discovery Communications and Nexstar Broadcasting Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Discovery Communications||$6.59 billion||1.99||$2.49 billion||$1.89||12.18|
|Nexstar Broadcasting Group||$1.39 billion||2.12||$488.14 million||$2.33||26.76|
Discovery Communications has higher revenue and earnings than Nexstar Broadcasting Group. Discovery Communications is trading at a lower price-to-earnings ratio than Nexstar Broadcasting Group, indicating that it is currently the more affordable of the two stocks.
This table compares Discovery Communications and Nexstar Broadcasting Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Nexstar Broadcasting Group||5.47%||24.33%||3.04%|
Nexstar Broadcasting Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.9%. Discovery Communications does not pay a dividend. Nexstar Broadcasting Group pays out 51.5% of its earnings in the form of a dividend.
Institutional and Insider Ownership
46.8% of Discovery Communications shares are held by institutional investors. 5.0% of Discovery Communications shares are held by company insiders. Comparatively, 8.4% of Nexstar Broadcasting Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Risk and Volatility
Discovery Communications has a beta of 1.47, meaning that its share price is 47% more volatile than the S&P 500. Comparatively, Nexstar Broadcasting Group has a beta of 2.31, meaning that its share price is 131% more volatile than the S&P 500.
This is a breakdown of recent ratings for Discovery Communications and Nexstar Broadcasting Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Nexstar Broadcasting Group||0||0||7||0||3.00|
Nexstar Broadcasting Group has a consensus price target of $78.86, suggesting a potential upside of 26.47%. Given Nexstar Broadcasting Group’s stronger consensus rating and higher possible upside, analysts plainly believe Nexstar Broadcasting Group is more favorable than Discovery Communications.
Nexstar Broadcasting Group beats Discovery Communications on 10 of the 16 factors compared between the two stocks.
About Discovery Communications
Discovery Communications, Inc. (Discovery) is a global media company. The Company provides content across multiple distribution platforms, including pay-television (pay-TV), free-to-air (FTA) and broadcast television, Websites, digital distribution arrangements and content licensing agreements. Its segments include U.S. Networks, which consists principally of domestic television networks and digital content services; International Networks, consisting primarily of international television networks and digital content services, and Education and Other, which consists principally of curriculum-based product and service offerings, and production studios. The Company’s portfolio of networks includes television brands, such as Discovery Channel, Animal Planet, ID, Velocity (known as Turbo outside of the United States) and Eurosport. It is also engaged in extending content distribution across various platforms, including brand-aligned Websites, Web-native networks and online streaming.
About Nexstar Broadcasting Group
Nexstar Media Group, Inc., formerly Nexstar Broadcasting Group, Inc., is a television broadcasting and digital media company. The Company is focused on the acquisition, development and operation of television stations and interactive community Websites, and digital media services in medium-sized markets in the United States. The Company’s segments include Broadcasting and Other. The Company’s broadcast segment includes television stations and related community-focused Websites that it owns, operates, programs or provides sales and other services to in various markets across the United States. The other activities of the Company include corporate functions, eliminations and other operations. As of December 31, 2016, it owned, operated, programmed or provided sales and other services to 104 full power television stations in 62 markets in the states of Alabama, Arizona, Arkansas, California, Colorado, Florida, New York, Utah, Vermont, Virginia, West Virginia and Wisconsin, among others.
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