Discovery Communications (NASDAQ: DISCA) and Nexstar Broadcasting Group (NASDAQ:NXST) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Institutional and Insider Ownership

45.8% of Discovery Communications shares are owned by institutional investors. 6.8% of Discovery Communications shares are owned by company insiders. Comparatively, 7.8% of Nexstar Broadcasting Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

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.

Valuation & Earnings

This table compares Discovery Communications and Nexstar Broadcasting Group’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 1.92 $2.48 billion $1.89 11.74
Nexstar Broadcasting Group $1.75 billion 1.66 $608.81 million $2.46 25.49

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.

Risk and Volatility

Discovery Communications has a beta of 1.59, suggesting that its stock price is 59% more volatile than the S&P 500. Comparatively, Nexstar Broadcasting Group has a beta of 2.31, suggesting that its stock price is 131% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Discovery Communications and Nexstar Broadcasting Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Discovery Communications 3 11 3 0 2.00
Nexstar Broadcasting Group 0 0 7 0 3.00

Discovery Communications currently has a consensus target price of $27.27, suggesting a potential upside of 22.88%. Nexstar Broadcasting Group has a consensus target price of $78.57, suggesting a potential upside of 25.31%. Given Nexstar Broadcasting Group’s stronger consensus rating and higher possible upside, analysts plainly believe Nexstar Broadcasting Group is more favorable than Discovery Communications.

Profitability

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
Discovery Communications 16.88% 22.74% 7.59%
Nexstar Broadcasting Group 5.44% 18.35% 2.62%

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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