Discovery Communications (NASDAQ: DISCA) and TEGNA (NYSE:TGNA) are both mid-cap consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.

Dividends

TEGNA pays an annual dividend of $0.28 per share and has a dividend yield of 2.1%. Discovery Communications does not pay a dividend. TEGNA pays out 17.0% of its earnings in the form of a dividend.

Profitability

This table compares Discovery Communications and TEGNA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Discovery Communications 16.88% 22.74% 7.59%
TEGNA 11.90% 20.51% 5.56%

Insider & Institutional Ownership

44.2% of Discovery Communications shares are owned by institutional investors. Comparatively, 90.1% of TEGNA shares are owned by institutional investors. 5.8% of Discovery Communications shares are owned by company insiders. Comparatively, 0.8% of TEGNA shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Discovery Communications has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, TEGNA has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Discovery Communications and TEGNA, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Discovery Communications 3 11 3 0 2.00
TEGNA 1 3 4 0 2.38

Discovery Communications presently has a consensus price target of $27.27, suggesting a potential upside of 20.55%. TEGNA has a consensus price target of $19.79, suggesting a potential upside of 51.50%. Given TEGNA’s stronger consensus rating and higher possible upside, analysts clearly believe TEGNA is more favorable than Discovery Communications.

Valuation & Earnings

This table compares Discovery Communications and TEGNA’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Discovery Communications $6.59 billion 1.96 $2.48 billion $1.89 11.97
TEGNA $3.35 billion 0.84 $1.17 billion $1.65 7.92

Discovery Communications has higher revenue and earnings than TEGNA. TEGNA is trading at a lower price-to-earnings ratio than Discovery Communications, indicating that it is currently the more affordable of the two stocks.

Summary

Discovery Communications beats TEGNA on 10 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.

TEGNA Company Profile

Tegna Inc. has a portfolio of media and digital businesses that provide content. The Company’s segments include TEGNA Media (Media) and TEGNA Digital (Digital). As of December 31, 2016, its media business included 46 television stations operating in 38 markets and offered television programming and digital content. Its Media segment includes core advertising, including local and national non-political advertising; political advertising during elections; retransmission that represents satellite and cable networks, and telecommunications companies to carry its television signals; digital that includes digital marketing services and advertising on the stations’ Websites, tablet and mobile products, and other services. Its Digital business segment includes G/O Digital and Cofactor.

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