Time Warner (NYSE: TWX) and The Madison Square Garden Company (NYSE:MSG) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, risk, profitabiliy, valuation, dividends, institutional ownership and analyst recommendations.

Insider and Institutional Ownership

81.0% of Time Warner shares are owned by institutional investors. Comparatively, 84.9% of The Madison Square Garden Company shares are owned by institutional investors. 0.2% of Time Warner shares are owned by company insiders. Comparatively, 18.6% of The Madison Square Garden Company shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Time Warner pays an annual dividend of $1.61 per share and has a dividend yield of 1.6%. The Madison Square Garden Company does not pay a dividend. Time Warner pays out 30.8% of its earnings in the form of a dividend. The Madison Square Garden Company has raised its dividend for 8 consecutive years.

Profitability

This table compares Time Warner and The Madison Square Garden Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Time Warner 13.90% 19.45% 7.28%
The Madison Square Garden Company -3.81% -1.57% -1.12%

Valuation and Earnings

This table compares Time Warner and The Madison Square Garden Company’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Time Warner $29.75 billion 2.60 $8.74 billion $5.23 19.10
The Madison Square Garden Company $1.23 billion 3.78 $97.01 million ($1.93) -102.45

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

Volatility & Risk

Time Warner has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, The Madison Square Garden Company has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Time Warner and The Madison Square Garden Company, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Time Warner 0 20 10 0 2.33
The Madison Square Garden Company 1 3 6 0 2.50

Time Warner presently has a consensus price target of $100.86, indicating a potential upside of 0.96%. The Madison Square Garden Company has a consensus price target of $192.78, indicating a potential downside of 2.50%. Given Time Warner’s higher probable upside, equities research analysts plainly believe Time Warner is more favorable than The Madison Square Garden Company.

Summary

Time Warner beats The Madison Square Garden Company on 10 of the 16 factors compared between the two stocks.

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.

The Madison Square Garden Company Company Profile

The Madison Square Garden Company is a holding company, which is engaged in live experiences consisting of celebrated venues, sports teams, and entertainment productions. The Company operates in two segments, which include MSG Entertainment and MSG Sports. The MSG Sports segment includes the Company’s professional sports franchises, which include the New York Knicks (the Knicks) of the National Basketball Association (the NBA), the New York Rangers (the Rangers) of the National Hockey League (the NHL), the New York Liberty (the Liberty) of the Women’s National Basketball Association (the WNBA), the Hartford Wolf Pack of the American Hockey League (the AHL), which is the primary player development team for the Rangers, and the Westchester Knicks, an NBA Development League team. The MSG Entertainment segment includes the Company’s live entertainment events. The Company presents or hosts live entertainment events, including concerts, family shows, performing arts and special events.

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