Warner Music Group (NASDAQ:WMG – Get Free Report) and News (NASDAQ:NWSA – Get Free Report) are both large-cap consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.
Dividends
Warner Music Group pays an annual dividend of $0.76 per share and has a dividend yield of 2.3%. News pays an annual dividend of $0.20 per share and has a dividend yield of 0.7%. 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. News pays out 9.6% 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.
Institutional and Insider Ownership
96.9% of Warner Music Group shares are owned by institutional investors. Comparatively, 67.0% of News shares are owned by institutional investors. 72.2% of Warner Music Group shares are owned by company insiders. Comparatively, 13.6% of News shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Warner Music Group | 0 | 10 | 8 | 1 | 2.53 |
| News | 0 | 1 | 6 | 1 | 3.00 |
Warner Music Group presently has a consensus price target of $34.65, suggesting a potential upside of 4.08%. News has a consensus price target of $38.62, suggesting a potential upside of 28.00%. Given News’ stronger consensus rating and higher probable upside, analysts plainly believe News is more favorable than Warner Music Group.
Risk & 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, News has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.
Profitability
This table compares Warner Music Group and News’ 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% |
| News | 13.21% | 5.66% | 3.19% |
Valuation and Earnings
This table compares Warner Music Group and News”s top-line 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 | 2.70 | $435.00 million | $0.57 | 58.40 |
| News | $8.45 billion | 2.02 | $1.18 billion | $2.08 | 14.50 |
News has higher revenue and earnings than Warner Music Group. News 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.
Summary
Warner Music Group beats News on 9 of the 17 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 News
News Corporation, a media and information services company, creates and distributes authoritative and engaging content, and other products and services for consumers and businesses worldwide. It operates through six segments: Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other. The company distributes content and data products, including The Wall Street Journal, Barron’s, MarketWatch, Investor’s Business Daily, Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, and Dow Jones Energy through various media channels, such as newspapers, newswires, websites, mobile apps, newsletters, magazines, proprietary databases, live journalism, video, and podcasts. It also owns and operates Monday to Friday, Saturday and Sunday, weekly, and bi-weekly newspapers comprising The Australian, The Weekend Australian, The Daily Telegraph, The Sunday Telegraph, Herald Sun, Sunday Herald Sun, The Courier Mail, The Sunday Mail, The Advertiser, Sunday Mail, The Sun, The Sun on Sunday, The Times, The Sunday Times, and New York Post, as well as digital mastheads and other websites. In addition, the company publishes general fiction, nonfiction, children’s, and religious books; provides sports, entertainment, and news services to pay-TV and streaming subscribers, and other commercial licensees through satellite and internet distribution; and broadcasts rights to live sporting events. Further, it offers property and property-related advertising and services on its websites and mobile applications; digital real estate services; and financial services. News Corporation was founded in 2012 and is headquartered in New York, New York.
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