Salem Media Group (NASDAQ: SALM) and Pandora Media (NYSE:P) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Volatility & Risk

Salem Media Group has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500. Comparatively, Pandora Media has a beta of 0.08, suggesting that its stock price is 92% less volatile than the S&P 500.

Profitability

This table compares Salem Media Group and Pandora Media’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Salem Media Group 2.75% 6.26% 2.28%
Pandora Media -39.90% -58.81% -23.75%

Dividends

Salem Media Group pays an annual dividend of $0.26 per share and has a dividend yield of 3.8%. Pandora Media does not pay a dividend. Salem Media Group pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Salem Media Group and Pandora Media, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Salem Media Group 0 0 1 0 3.00
Pandora Media 2 18 17 0 2.41

Pandora Media has a consensus price target of $11.90, suggesting a potential upside of 47.34%. Given Pandora Media’s higher possible upside, analysts clearly believe Pandora Media is more favorable than Salem Media Group.

Earnings & Valuation

This table compares Salem Media Group and Pandora Media’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Salem Media Group $273.06 million 0.66 $46.09 million $0.28 24.46
Pandora Media $1.44 billion 1.36 -$288.22 million ($2.41) -3.35

Salem Media Group has higher revenue, but lower earnings than Pandora Media. Pandora Media is trading at a lower price-to-earnings ratio than Salem Media Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

29.5% of Salem Media Group shares are owned by institutional investors. 60.0% of Salem Media Group shares are owned by insiders. Comparatively, 2.6% of Pandora Media shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Salem Media Group beats Pandora Media on 10 of the 15 factors compared between the two stocks.

About Salem Media Group

Salem Media Group, Inc., formerly Salem Communications Corporation, is a multi-media company specializing in Christian and Conservative content, with media properties consisting of radio broadcasting, digital media, and book, magazine and newsletter publishing. The Company operates through three segments: Broadcast, Digital Media and Publishing. The Company’s broadcasting segment is engaged in the ownership and operation of radio stations in metropolitan markets. The Company’s radio stations carry national and local programming content, as well as national and local advertisers. The Company’s Digital Media segment focuses on Web-based platform designed for audiences interested in Christian and family-themed content and conservative news. The Company’s publishing segment consists of Regnery Publishing, Xulon Press and Salem Publishing. The Company owns and operates approximately 116 radio stations in over 40 markets.

About Pandora Media

Pandora Media, Inc. (Pandora) is a music discovery platform, offering a personalized experience for each of its listeners wherever and whenever they want to listen to music, whether through earbuds, car speakers or live on stage. The Company delivers targeted messages to its listeners using a combination of audio, display and video advertisements. Its segments include Pandora-Internet Radio Service and Ticketfly. As of December 31, 2016, it provided Pandora service through two models: advertising-supported service and subscription service-Pandora Plus. Pandora is integrated with connected devices, including automobiles, automotive aftermarket devices and consumer electronic devices. Its Ticketfly service is a cloud ticketing platform for live events. It operates ticketing service through its subsidiary, Ticketfly, a live events technology company that provides ticketing and marketing software and services for its clients, which are venues and event promoters, across North America.

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