Warner Music Group (NASDAQ:WMG) & IMAX (NYSE:IMAX) Critical Contrast

Warner Music Group (NASDAQ:WMG) and IMAX (NYSE:IMAX) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Warner Music Group and IMAX, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Warner Music Group	0	10	8	1	2.53
IMAX	1	1	8	1	2.82

Warner Music Group presently has a consensus price target of $33.8824, indicating a potential upside of 4.45%. IMAX has a consensus price target of $32.80, indicating a potential upside of 27.61%. Given IMAX’s stronger consensus rating and higher possible upside, analysts plainly believe IMAX is more favorable than Warner Music Group.

Risk and Volatility

Warner Music Group has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, IMAX has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Profitability

This table compares Warner Music Group and IMAX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Warner Music Group	4.59%	39.95%	3.16%
IMAX	9.04%	8.62%	3.89%

Valuation and Earnings

This table compares Warner Music Group and IMAX”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Warner Music Group	$6.47 billion	2.61	$435.00 million	$0.57	56.91
IMAX	$352.21 million	3.92	$26.06 million	$0.60	42.84

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

Insider and Institutional Ownership

96.9% of Warner Music Group shares are held by institutional investors. Comparatively, 93.5% of IMAX shares are held by institutional investors. 72.2% of Warner Music Group shares are held by company insiders. Comparatively, 24.1% of IMAX shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Warner Music Group beats IMAX on 7 of the 13 factors compared between the two stocks.

About Warner Music Group

Warner Music Group Corp. operates as a music entertainment company in the United States, the United Kingdom, Germany, and internationally. It operates through Recorded Music and Music Publishing segments. The Recorded Music segment is involved in the discovery and development of recording artists, as well as related marketing, promotion, distribution, sale, and licensing of music created by such recording artists; markets its music catalog through compilations and reissuances of previously released music and video titles, as well as previously unreleased materials; and conducts its operation primarily through a collection of record labels, such as Warner Records and Atlantic Records, as well as Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Sire, Spinnin’ Records, Warner Classics, and Warner Music Nashville. This segment markets, distributes, and sells music and video products to retailers and wholesale distributors; independent labels to retail and wholesale distributors; and various distribution centers and ventures, as well as retail outlets, online physical retailers, streaming services, and download services. The Music Publishing segment owns and acquires rights to approximately one million musical compositions comprising pop hits, American standards, folk songs, and motion picture and theatrical compositions. Its catalog includes approximately 150,000 songwriters and composers; and various genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative, and gospel. This segment also administers the music and soundtracks of various third-party television and film producers and studios. The company was founded in 1929 and is headquartered in New York, New York.

About IMAX

IMAX Corporation, together with its subsidiaries, operates as a technology platform for entertainment and events worldwide. The company operates in two segments, Content Solutions and Technology Products and Services. The company offers IMAX DMR, a proprietary technology that digitally remasters films and other content into IMAX formats for distribution to the IMAX network; IMAX Enhanced that provides end-to-end technology across streaming content and entertainment devices at home; and SSIMWAVE, an AI-driven video quality solutions for media and entertainment companies. It also offers preventative and emergency maintenance services and quality monitoring to the IMAX network; film post-production services; and IMAX film and digital cameras to content creators. In addition, the company engages in the distribution of large-format documentary films to institutional theaters, as well as live performances and interactive events with artists and creators; after-market sales of IMAX System parts and 3D glasses; sale or lease of IMAX theater systems; provision of management services to three other theaters, as well as production advice and technical assistance to documentary and Hollywood filmmakers; and rental of company’s proprietary 2D and 3D large-format film cameras. The company markets its theater systems through a direct sales force and marketing staff to science and natural history museums, zoos, aquaria, and other educational and cultural centers, as well as theme parks, private home theaters, tourist destination sites, fairs, and expositions. It offers its services under the IMAX, IMAX 3D, Experience It In IMAX, The IMAX Experience, DMR, Filmed For IMAXTM, IMAX Live, IMAX Enhanced, and SSIMWAVE. The company operates a network of IMAX systems comprising commercial multiplexes, commercial destinations, and institutional locations in 90 countries and territories. IMAX Corporation was founded in 1967 and is headquartered in Mississauga, Canada.