Roku (NASDAQ:ROKU) versus Townsquare Media (NYSE:TSQ) Critical Review

Townsquare Media (NYSE:TSQ) and Roku (NASDAQ:ROKU) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Valuation & Earnings

This table compares Townsquare Media and Roku”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Townsquare Media	$427.38 million	0.20	-$10.93 million	($0.71)	-7.16
Roku	$4.74 billion	2.96	$88.36 million	$0.57	166.72

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

Institutional and Insider Ownership

71.7% of Townsquare Media shares are held by institutional investors. Comparatively, 86.3% of Roku shares are held by institutional investors. 30.5% of Townsquare Media shares are held by company insiders. Comparatively, 14.0% of Roku shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Townsquare Media and Roku, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Townsquare Media	1	0	2	0	2.33
Roku	0	4	23	1	2.89

Townsquare Media currently has a consensus target price of $15.50, suggesting a potential upside of 204.82%. Roku has a consensus target price of $125.40, suggesting a potential upside of 31.96%. Given Townsquare Media’s higher possible upside, equities analysts clearly believe Townsquare Media is more favorable than Roku.

Risk and Volatility

Townsquare Media has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Roku has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500.

Profitability

This table compares Townsquare Media and Roku’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Townsquare Media	-2.58%	-13.74%	0.82%
Roku	1.87%	3.40%	2.04%

Summary

Roku beats Townsquare Media on 13 of the 15 factors compared between the two stocks.

About Townsquare Media

Townsquare Media, Inc. operates as a digital media and marketing solutions company in small and medium-sized businesses. It operates through three segments: Subscription Digital Marketing Solutions, Digital Advertising, and Broadcast Advertising. The Subscription Digital Marketing Solutions segment offers website design, creation, and development, as well as hosting services; and search engine optimization, online directory optimization, e-commerce solutions, online reputation monitoring, social media management, appointment scheduling, payment and invoice, customer management, and email and SMS marketing services. The Digital Advertising segment provides digital advertising on its owned and operated, digital programmatic advertising, and data analytics and management platform. The Broadcast Advertising segment engages in the sale of advertising on local radio stations to local, regional, and national spot advertisers, as well as national network advertisers. It also owns and operates live events, including concerts, expositions, and other experiential events; and operates local media under the WYRK.com, WJON.com, and NJ101.5.com brands, as well as national music under the XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com brands. The company was formerly known as Regent Communications, Inc. and changed its name to Townsquare Media, Inc. in May 2010. Townsquare Media, Inc. is headquartered in Purchase, New York.

About Roku

Roku, Inc., together with its subsidiaries, operates a TV streaming platform in the United states and internationally. The company operates in two segments, Platform and Devices. Its streaming platform allows users to find and access TV shows, movies, news, sports, and others. The Platform segment offers digital advertising, including direct and programmatic video advertising, media and entertainment promotional spending, and related services; and streaming services distribution, such as subscription and transaction revenue shares, and sale of premium subscriptions and branded app buttons on remote controls. The Devices segment provides sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories as well as licensing arrangements with service operators. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.