Analyzing Lions Gate Entertainment Corp. (LGF) and Viacom (VIAB)

Viacom (NASDAQ: VIAB) and Lions Gate Entertainment Corp. (NYSE:LGF) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, valuation, analyst recommendations, earnings, institutional ownership and profitabiliy.

Insider and Institutional Ownership

76.9% of Viacom shares are owned by institutional investors. Comparatively, 96.7% of Lions Gate Entertainment Corp. shares are owned by institutional investors. 0.4% of Viacom shares are owned by company insiders. Comparatively, 30.4% of Lions Gate Entertainment Corp. 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.

Risk and Volatility

Viacom has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500. Comparatively, Lions Gate Entertainment Corp. has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Dividends

Viacom pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. Lions Gate Entertainment Corp. pays an annual dividend of $0.27 per share and has a dividend yield of 1.0%. Viacom pays out 26.4% of its earnings in the form of a dividend. Lions Gate Entertainment Corp. pays out 122.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Viacom has raised its dividend for 2 consecutive years. Viacom is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Viacom and Lions Gate Entertainment Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viacom 5 16 9 0 2.13
Lions Gate Entertainment Corp. 0 0 17 0 3.00

Viacom presently has a consensus price target of $43.32, suggesting a potential upside of 22.27%. Lions Gate Entertainment Corp. has a consensus price target of $30.25, suggesting a potential upside of 15.94%. Given Viacom’s higher possible upside, equities research analysts plainly believe Viacom is more favorable than Lions Gate Entertainment Corp..

Profitability

This table compares Viacom and Lions Gate Entertainment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viacom 9.32% 32.00% 6.20%
Lions Gate Entertainment Corp. 4.89% 10.25% 2.66%

Valuation & Earnings

This table compares Viacom and Lions Gate Entertainment Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Viacom $12.91 billion 1.10 $2.89 billion $3.03 11.69
Lions Gate Entertainment Corp. N/A N/A N/A $0.22 118.60

Viacom has higher revenue and earnings than Lions Gate Entertainment Corp.. Viacom is trading at a lower price-to-earnings ratio than Lions Gate Entertainment Corp., indicating that it is currently the more affordable of the two stocks.

Summary

Viacom beats Lions Gate Entertainment Corp. on 10 of the 14 factors compared between the two stocks.

Viacom Company Profile

Viacom Inc. offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Media Networks segment creates, acquires and distributes programming and other content for audiences The Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.

Lions Gate Entertainment Corp. Company Profile

Lions Gate Entertainment Corp. is engaged in motion picture production and distribution, television programming and syndication, home entertainment, international distribution and sales, branded channel platforms, interactive ventures and games and location-based entertainment. The Company operates through two segments: Motion Pictures and Television Production. The Company’s Motion Pictures segment consists of the development and production of feature films, acquisition of North American and around the world distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and around the world licensing of distribution rights to feature films produced and acquired. The Company’s Television Production segment consists of the development, production and around the world distribution of television productions, including television series, television movies, and mini-series and non-fiction programming.

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