Analyzing Discovery Communications (DISCA) & Nexstar Broadcasting Group (NXST)
Discovery Communications (NASDAQ: DISCA) and Nexstar Broadcasting Group (NASDAQ:NXST) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, risk and dividends.
Insider and Institutional Ownership
44.3% of Discovery Communications shares are held by institutional investors. 5.8% of Discovery Communications shares are held by insiders. Comparatively, 7.8% of Nexstar Broadcasting Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk and Volatility
Discovery Communications has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, Nexstar Broadcasting Group has a beta of 2.31, indicating that its stock price is 131% more volatile than the S&P 500.
Valuation & Earnings
This table compares Discovery Communications and Nexstar Broadcasting Group’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Discovery Communications||$6.59 billion||1.98||$2.48 billion||$1.89||12.12|
|Nexstar Broadcasting Group||$1.75 billion||1.69||$608.81 million||$2.46||26.08|
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.
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 48.8% of its earnings in the form of a dividend.
This is a breakdown of recent ratings and recommmendations 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|
Discovery Communications presently has a consensus price target of $28.25, indicating a potential upside of 23.31%. Nexstar Broadcasting Group has a consensus price target of $78.57, indicating a potential upside of 22.48%. Given Discovery Communications’ higher probable upside, equities analysts clearly believe Discovery Communications is more favorable than Nexstar Broadcasting Group.
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||5.44%||18.35%||2.62%|
Discovery Communications beats Nexstar Broadcasting Group on 9 of the 16 factors compared between the two stocks.
Discovery Communications Company Profile
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.
Nexstar Broadcasting Group Company Profile
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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