Head-To-Head Review: Scholastic (NASDAQ:SCHL) and Sirius XM (NASDAQ:SIRI)

Sirius XM (NASDAQ:SIRI) and Scholastic (NASDAQ:SCHL) are both communication services companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, risk and dividends.

Profitability

This table compares Sirius XM and Scholastic’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sirius XM	10.47%	9.42%	4.10%
Scholastic	3.60%	5.00%	2.22%

Volatility and Risk

Sirius XM has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Scholastic has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Dividends

Sirius XM pays an annual dividend of $1.08 per share and has a dividend yield of 3.4%. Scholastic pays an annual dividend of $1.00 per share and has a dividend yield of 2.6%. Sirius XM pays out 44.3% of its earnings in the form of a dividend. Scholastic pays out 71.4% 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. Sirius XM has raised its dividend for 7 consecutive years. Sirius XM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Sirius XM and Scholastic”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sirius XM	$8.90 billion	1.21	$805.00 million	$2.44	13.17
Scholastic	$1.58 billion	0.46	$56.70 million	$1.40	27.27

Sirius XM has higher revenue and earnings than Scholastic. Sirius XM is trading at a lower price-to-earnings ratio than Scholastic, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

10.7% of Sirius XM shares are owned by institutional investors. Comparatively, 82.6% of Scholastic shares are owned by institutional investors. 3.3% of Sirius XM shares are owned by company insiders. Comparatively, 12.8% of Scholastic shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Sirius XM and Scholastic, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sirius XM	3	7	9	0	2.32
Scholastic	0	3	0	0	2.00

Sirius XM presently has a consensus target price of $32.67, indicating a potential upside of 1.67%. Scholastic has a consensus target price of $35.00, indicating a potential downside of 8.33%. Given Sirius XM’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Sirius XM is more favorable than Scholastic.

Summary

Sirius XM beats Scholastic on 13 of the 17 factors compared between the two stocks.

About Sirius XM

Sirius XM Holdings Inc. provides audio entertainment through its SiriusXM and Pandora services. SiriusXM offers music, talk, news, sports, and other programming through satellite radio and streaming, including access through its mobile app and in-vehicle systems. The company also operates Pandora, a streaming music and podcast service that offers both ad-supported and subscription listening. Its business includes advertising and connected-vehicle services, alongside subscriptions and audio programming.

About Scholastic

Scholastic is a global children’s publishing, education and media company. Its businesses include publishing and distributing children’s books, providing educational materials and classroom resources, and operating book clubs and book fairs that connect students with books. The company’s products and services include fiction and nonfiction books, classroom magazines, curriculum materials and digital learning resources. Scholastic serves schools, educators, families and young readers in the United States and international markets.