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

Profitability

This table compares Nexstar Broadcasting Group and Discovery Communications’ 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 16.88% 22.74% 7.59%

Analyst Ratings

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

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

Nexstar Broadcasting Group presently has a consensus price target of $78.57, indicating a potential upside of 32.83%. Discovery Communications has a consensus price target of $27.27, indicating a potential upside of 27.77%. Given Nexstar Broadcasting Group’s stronger consensus rating and higher possible upside, analysts plainly believe Nexstar Broadcasting Group is more favorable than Discovery Communications.

Insider and Institutional Ownership

45.9% of Discovery Communications shares are owned by institutional investors. 7.8% of Nexstar Broadcasting Group shares are owned by insiders. Comparatively, 6.8% of Discovery Communications shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Nexstar Broadcasting Group and Discovery Communications’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nexstar Broadcasting Group $1.75 billion 1.56 $608.81 million $2.46 24.04
Discovery Communications $6.59 billion 1.85 $2.48 billion $1.89 11.29

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.

Dividends

Nexstar Broadcasting Group pays an annual dividend of $1.20 per share and has a dividend yield of 2.0%. Discovery Communications does not pay a dividend. Nexstar Broadcasting Group pays out 48.8% of its earnings in the form of a dividend.

Volatility and Risk

Nexstar Broadcasting Group has a beta of 2.27, suggesting that its stock price is 127% more volatile than the S&P 500. Comparatively, Discovery Communications has a beta of 1.59, suggesting that its stock price is 59% more volatile than the S&P 500.

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.

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.

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