Contrasting Cinemark (NYSE:CNK) & Warner Music Group (NASDAQ:WMG)

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Warner Music Group and Cinemark, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Warner Music Group	0	10	8	1	2.53
Cinemark	1	1	10	0	2.75

Warner Music Group presently has a consensus target price of $33.88, indicating a potential upside of 1.60%. Cinemark has a consensus target price of $33.67, indicating a potential upside of 30.47%. Given Cinemark’s stronger consensus rating and higher probable upside, analysts plainly believe Cinemark is more favorable than Warner Music Group.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Warner Music Group	$6.43 billion	2.71	$435.00 million	$0.57	58.51
Cinemark	$3.05 billion	0.97	$309.70 million	$1.83	14.10

Warner Music Group has higher revenue and earnings than Cinemark. Cinemark 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.

Risk and Volatility

Warner Music Group has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Cinemark has a beta of 1.85, suggesting that its stock price is 85% more volatile than the S&P 500.

Insider & Institutional Ownership

96.9% of Warner Music Group shares are held by institutional investors. 72.2% of Warner Music Group shares are held by company insiders. Comparatively, 2.3% of Cinemark shares are held 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.

Dividends

Warner Music Group pays an annual dividend of $0.76 per share and has a dividend yield of 2.3%. Cinemark pays an annual dividend of $0.32 per share and has a dividend yield of 1.2%. Warner Music Group pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cinemark pays out 17.5% of its earnings in the form of a dividend. Warner Music Group has increased its dividend for 4 consecutive years. Warner Music Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Warner Music Group and Cinemark’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%
Cinemark	9.13%	59.16%	5.99%

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 Cinemark

Cinemark Holdings, Inc., together with its subsidiaries, engages in the motion picture exhibition business. As of February 16, 2024, it operated 501 theatres with 5,719 screens in 42 states and 13 countries in South and Central America. Cinemark Holdings, Inc. was founded in 1984 and is headquartered in Plano, Texas.