AMC Networks (AMCX) and Time Warner (TWX) Critical Contrast

AMC Networks (NASDAQ: AMCX) and Time Warner (NYSE:TWX) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, earnings, profitability, analyst recommendations, risk, institutional ownership and valuation.

Dividends

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Time Warner pays an annual dividend of $1.61 per share and has a dividend yield of 1.7%. AMC Networks does not pay a dividend. Time Warner pays out 24.3% of its earnings in the form of a dividend.

Volatility and Risk

AMC Networks has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Time Warner has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for AMC Networks and Time Warner, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AMC Networks 0 11 1 0 2.08
Time Warner 0 13 8 0 2.38

AMC Networks currently has a consensus target price of $59.40, suggesting a potential upside of 20.95%. Time Warner has a consensus target price of $104.33, suggesting a potential upside of 12.71%. Given AMC Networks’ higher possible upside, analysts clearly believe AMC Networks is more favorable than Time Warner.

Profitability

This table compares AMC Networks and Time Warner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AMC Networks 16.80% 531.46% 10.26%
Time Warner 16.78% 18.96% 7.54%

Institutional & Insider Ownership

90.4% of AMC Networks shares are held by institutional investors. Comparatively, 80.8% of Time Warner shares are held by institutional investors. 17.7% of AMC Networks shares are held by insiders. Comparatively, 0.2% of Time Warner shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares AMC Networks and Time Warner’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AMC Networks $2.81 billion 1.06 $471.31 million $7.20 6.82
Time Warner $31.27 billion 2.31 $5.25 billion $6.62 13.98

Time Warner has higher revenue and earnings than AMC Networks. AMC Networks is trading at a lower price-to-earnings ratio than Time Warner, indicating that it is currently the more affordable of the two stocks.

AMC Networks Company Profile

AMC Networks Inc. is a holding company, which conducts all of its operations through its subsidiaries. The Company owns and operates entertainment businesses and assets. It operates through two segments: National Networks, and International and Other. National Networks includes activities of its programming businesses, which include its programming networks distributed in the United States and Canada. The International and Other segment includes AMC Networks International (AMCNI), the Company’s international programming businesses consisting of a portfolio of channels in Europe, Latin America, the Middle East and parts of Asia and Africa; IFC Films, the Company’s independent film distribution business; AMCNI- DMC, the broadcast solutions unit of certain networks of AMCNI and third-party networks, and various developing online content distribution initiatives. National Networks’ programming networks include AMC, WE tv, BBC AMERICA and SundanceTV.

Time Warner Company Profile

Time Warner Inc. is a media and entertainment company. The Company operates through three segments: Turner, which consists of cable networks and digital media properties; Home Box Office, which consists of premium pay television and over the top (OTT) services and premium pay, basic tier television and OTT services internationally, and Warner Bros., which consists of television, feature film, home video, and videogame production and distribution. It also holds interests in companies that operate broadcast networks. The Company holds interest in Central European Media Enterprises Ltd. (CME), which is a broadcasting company that operates television networks in Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic and Slovenia and The CW broadcast network (The CW), which includes a lineup of advertising-supported original programming, such as The 100, Arrow, Crazy Ex-Girlfriend, DC’s Legends of Tomorrow, The Flash, Frequency, iZombie, Jane the Virgin and No Tomorrow.

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