Graham Holdings (NYSE: GHC) and Service Corporation International (NYSE:SCI) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Earnings and Valuation

This table compares Graham Holdings and Service Corporation International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Graham Holdings $2.48 billion 1.24 $168.59 million $22.20 25.16
Service Corporation International $3.03 billion 2.15 $177.03 million $1.90 18.32

Service Corporation International has higher revenue and earnings than Graham Holdings. Service Corporation International is trading at a lower price-to-earnings ratio than Graham Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Graham Holdings and Service Corporation International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Graham Holdings 4.90% 5.50% 3.07%
Service Corporation International 11.83% 24.85% 2.38%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Graham Holdings and Service Corporation International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Graham Holdings 0 0 0 0 N/A
Service Corporation International 0 0 3 0 3.00

Service Corporation International has a consensus target price of $39.67, indicating a potential upside of 13.98%. Given Service Corporation International’s higher probable upside, analysts clearly believe Service Corporation International is more favorable than Graham Holdings.

Volatility and Risk

Graham Holdings has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, Service Corporation International has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Insider and Institutional Ownership

69.1% of Graham Holdings shares are held by institutional investors. Comparatively, 85.5% of Service Corporation International shares are held by institutional investors. 22.5% of Graham Holdings shares are held by company insiders. Comparatively, 6.2% of Service Corporation International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Graham Holdings pays an annual dividend of $5.08 per share and has a dividend yield of 0.9%. Service Corporation International pays an annual dividend of $0.60 per share and has a dividend yield of 1.7%. Graham Holdings pays out 22.9% of its earnings in the form of a dividend. Service Corporation International pays out 31.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Service Corporation International has raised its dividend for 5 consecutive years. Service Corporation International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Service Corporation International beats Graham Holdings on 11 of the 16 factors compared between the two stocks.

About Graham Holdings

Graham Holdings Company, formerly The Washington Post Company, is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC),WPLG-Miami (ABC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). The stations also broadcast digital channels focusing on classic television and lifestyle programming, in addition to operating mobile sites and mobile applications delivering breaking news, weather and community news.

About Service Corporation International

Service Corporation International is a provider of deathcare products and services, with a network of funeral service locations and cemeteries. The Company’s segments include Funeral, Cemetery and Corporate. It conducts both funeral and cemetery operations in the United States and Canada. As December 31, 2016, it operated 1,502 funeral service locations and 470 cemeteries, including 281 funeral service/cemetery combination locations, which are geographically diversified across 45 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. It offers various brands, such as Dignity Memorial, Dignity Planning, National Cremation Society, Advantage Funeral and Cremation Services, and Funeraria del Angel. Its funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses. It sells cemetery property, and funeral and cemetery merchandise and services.

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