Critical Analysis: Media General (MEG) versus News Corp (NASDAQ:NWSA)

News Corp (NASDAQ: NWSA) and Media General (NYSE:MEG) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Risk and Volatility

News Corp has a beta of 1.99, suggesting that its share price is 99% more volatile than the S&P 500. Comparatively, Media General has a beta of 1.64, suggesting that its share price is 64% more volatile than the S&P 500.

Earnings and Valuation

This table compares News Corp and Media General’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
News Corp $8.14 billion 0.95 $738.00 million ($1.28) -10.37
Media General N/A N/A N/A ($0.47) -39.38

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

Insider & Institutional Ownership

93.5% of News Corp shares are owned by institutional investors. Comparatively, 90.8% of Media General shares are owned by institutional investors. 13.9% of News Corp shares are owned by company insiders. Comparatively, 16.5% of Media General shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares News Corp and Media General’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
News Corp -9.07% 1.83% 1.40%
Media General -4.25% 6.92% 2.28%

Dividends

News Corp pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Media General does not pay a dividend. News Corp pays out -15.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for News Corp and Media General, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
News Corp 1 2 2 0 2.20
Media General 0 0 0 0 N/A

News Corp presently has a consensus price target of $15.20, suggesting a potential upside of 14.54%. Given News Corp’s higher possible upside, research analysts plainly believe News Corp is more favorable than Media General.

Summary

News Corp beats Media General on 7 of the 12 factors compared between the two stocks.

About News Corp

News Corporation is a diversified media and information services company. The Company operates in five segments: News and Information Services, Cable Network Programming, Digital Real Estate Services, Book Publishing, and Other. The Company’s business consists of range of media, including news and information services, sports programming in Australia, digital real estate services, book publishing, and pay-television (TV) distribution in Australia, that are distributed under the brands, including The Wall Street Journal, Dow Jones, Herald Sun, The Sun, The Times, HarperCollins Publishers, FOX SPORTS Australia and realestate.com.au. The Company is a developing provider of digital education content, assessment and delivery services. The Company’s business component includes News and Information Services, Cable Network Programming, Digital Real Estate Services, Book Publishing, Amplify and Foxtel. In July 2014, it completed the acquisition of Harlequin Enterprises from Torstar Corp.

About Media General

Media General, Inc. is a television broadcasting and digital media company. The Company provides news, information and entertainment in markets across the United States. The Company operates or services 71 network-affiliated broadcast television stations in 48 markets along with the digital media business. The Company’s network affiliations include twelve CBS stations, nine NBC stations, seven ABC stations, one FOX station, one CW station and one MyNetworkTV station. The Company offers consumers and advertisers with entertainment and information, content and distribution on every screen. Its portfolio of broadcast, digital and mobile products informs and engages 23% of United States Television (TV) households and 43% of the United States Internet audience. The Company has the diverse digital media business with a portfolio that includes LIN Digital, LIN Mobile, HYFN, Dedicated Media, Federated Media and BiteSizeTV.

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