Time Warner (NYSE: TWX) and MSG Networks (NYSE:MSGN) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, dividends, risk and profitabiliy.

Valuation & Earnings

This table compares Time Warner and MSG Networks’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Time Warner $30.12 billion 2.63 $8.69 billion $5.37 18.98
MSG Networks $673.00 million 1.88 $323.63 million $2.33 8.82

Time Warner has higher revenue and earnings than MSG Networks. MSG 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.

Risk and Volatility

Time Warner has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, MSG Networks has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Dividends

Time Warner pays an annual dividend of $1.61 per share and has a dividend yield of 1.6%. MSG Networks does not pay a dividend. Time Warner pays out 30.0% of its earnings in the form of a dividend. MSG Networks has raised its dividend for 8 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Time Warner 14.10% 19.14% 7.27%
MSG Networks 26.21% -16.20% 20.43%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Time Warner and MSG Networks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Time Warner 0 23 7 0 2.23
MSG Networks 0 5 4 0 2.44

Time Warner presently has a consensus target price of $102.32, indicating a potential upside of 0.37%. MSG Networks has a consensus target price of $24.13, indicating a potential upside of 17.40%. Given MSG Networks’ stronger consensus rating and higher possible upside, analysts plainly believe MSG Networks is more favorable than Time Warner.

Insider & Institutional Ownership

80.0% of Time Warner shares are owned by institutional investors. Comparatively, 78.3% of MSG Networks shares are owned by institutional investors. 0.2% of Time Warner shares are owned by company insiders. Comparatively, 18.1% of MSG Networks shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Time Warner beats MSG Networks on 10 of the 17 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.

MSG Networks Company Profile

MSG Networks Inc., formerly The Madison Square Garden Company, is engaged in sports production, and content development and distribution. The Company owns and operates two regional sports and entertainment networks, MSG Network (MSGN) and MSG+, collectively MSG Networks. Its networks are distributed throughout its territory, which includes all of New York State and significant portions of New Jersey and Connecticut, as well as parts of Pennsylvania. The Company delivers live games of the New York Knicks (the Knicks) of the National Basketball Association (NBA); the New York Rangers (the Rangers), New York Islanders (the Islanders), New Jersey Devils (the Devils) and Buffalo Sabres (the Sabres) of the National Hockey League (NHL); the New York Liberty (the Liberty) of the Women’s National Basketball Association; the New York Red Bulls (the Red Bulls) of Major League Soccer (MLS), and the Westchester Knicks of the National Basketball Association Developmental League.

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