Contrasting Lions Gate Entertainment Corp. (LGF) and World Wrestling Entertainment (WWE)

World Wrestling Entertainment (NYSE: WWE) and Lions Gate Entertainment Corp. (NYSE:LGF) are both consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Profitability

This table compares World Wrestling Entertainment and Lions Gate Entertainment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
World Wrestling Entertainment 3.29% 13.07% 5.51%
Lions Gate Entertainment Corp. 4.89% 10.25% 2.66%

Risk and Volatility

World Wrestling Entertainment has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Lions Gate Entertainment Corp. has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Institutional & Insider Ownership

49.8% of World Wrestling Entertainment shares are held by institutional investors. Comparatively, 96.7% of Lions Gate Entertainment Corp. shares are held by institutional investors. 49.8% of World Wrestling Entertainment shares are held by company insiders. Comparatively, 30.4% of Lions Gate Entertainment Corp. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares World Wrestling Entertainment and Lions Gate Entertainment Corp.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
World Wrestling Entertainment $762.15 million 2.13 $81.40 million $0.31 67.94
Lions Gate Entertainment Corp. N/A N/A N/A $0.22 118.60

World Wrestling Entertainment has higher revenue and earnings than Lions Gate Entertainment Corp.. World Wrestling Entertainment is trading at a lower price-to-earnings ratio than Lions Gate Entertainment Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for World Wrestling Entertainment and Lions Gate Entertainment Corp., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
World Wrestling Entertainment 1 2 6 0 2.56
Lions Gate Entertainment Corp. 0 1 14 0 2.93

World Wrestling Entertainment presently has a consensus target price of $24.43, indicating a potential upside of 16.00%. Lions Gate Entertainment Corp. has a consensus target price of $31.00, indicating a potential upside of 18.82%. Given Lions Gate Entertainment Corp.’s stronger consensus rating and higher probable upside, analysts clearly believe Lions Gate Entertainment Corp. is more favorable than World Wrestling Entertainment.

Dividends

World Wrestling Entertainment pays an annual dividend of $0.48 per share and has a dividend yield of 2.3%. Lions Gate Entertainment Corp. pays an annual dividend of $0.27 per share and has a dividend yield of 1.0%. World Wrestling Entertainment pays out 154.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lions Gate Entertainment Corp. pays out 122.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. World Wrestling Entertainment has increased its dividend for 2 consecutive years. World Wrestling Entertainment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

World Wrestling Entertainment Company Profile

World Wrestling Entertainment, Inc. (WWE) is an integrated media and entertainment company. The Company’s segments are Network, Television, Home Entertainment, Digital Media, Live Events, Licensing, Venue Merchandise, WWEShop, WWE Studios, and Corporate and Other. The Company is engaged in the production and distribution of content through various channels, including its WWE Network, television rights agreements, pay-per-view event programming, live events, feature films, licensing of various WWE themed products, and the sale of consumer products featuring its brands. Its Network, Television, Home Entertainment and Digital Media are individual segments that comprise the Media Division. Its Live Events, Licensing, Venue Merchandise and WWEShop are individual segments that comprise the Consumer Products Division. Its Network segment consists of subscriptions to WWE Network. The Company’s Television segment consists of television rights fees and advertising.

Lions Gate Entertainment Corp. Company Profile

Lions Gate Entertainment Corp. is engaged in motion picture production and distribution, television programming and syndication, home entertainment, international distribution and sales, branded channel platforms, interactive ventures and games and location-based entertainment. The Company operates through two segments: Motion Pictures and Television Production. The Company’s Motion Pictures segment consists of the development and production of feature films, acquisition of North American and around the world distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and around the world licensing of distribution rights to feature films produced and acquired. The Company’s Television Production segment consists of the development, production and around the world distribution of television productions, including television series, television movies, and mini-series and non-fiction programming.

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