Twenty-First Century Fox (NASDAQ: FOX) and Viacom (NASDAQ:VIA) are both large-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.
Insider and Institutional Ownership
23.4% of Twenty-First Century Fox shares are held by institutional investors. Comparatively, 2.4% of Viacom shares are held by institutional investors. 39.4% of Twenty-First Century Fox shares are held by insiders. Comparatively, 0.7% of Viacom shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This table compares Twenty-First Century Fox and Viacom’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Twenty-First Century Fox||10.30%||21.42%||7.01%|
Risk and Volatility
Twenty-First Century Fox has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, Viacom has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500.
Twenty-First Century Fox pays an annual dividend of $0.36 per share and has a dividend yield of 1.0%. Viacom pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. Twenty-First Century Fox pays out 22.2% of its earnings in the form of a dividend. Viacom pays out 17.1% 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. Viacom is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Twenty-First Century Fox and Viacom’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Twenty-First Century Fox||$28.50 billion||2.30||$2.95 billion||$1.62||21.83|
|Viacom||$13.26 billion||1.05||$1.87 billion||$4.67||7.44|
Twenty-First Century Fox has higher revenue and earnings than Viacom. Viacom is trading at a lower price-to-earnings ratio than Twenty-First Century Fox, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations for Twenty-First Century Fox and Viacom, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Twenty-First Century Fox||0||1||2||0||2.67|
Twenty-First Century Fox presently has a consensus price target of $34.00, indicating a potential downside of 3.85%. Viacom has a consensus price target of $36.00, indicating a potential upside of 3.60%. Given Viacom’s higher probable upside, analysts clearly believe Viacom is more favorable than Twenty-First Century Fox.
Twenty-First Century Fox beats Viacom on 8 of the 15 factors compared between the two stocks.
About Twenty-First Century Fox
Twenty-First Century Fox, Inc. is a media and entertainment company. The Company’s segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations. The Cable Network Programming segment produces and licenses news, business news, sports, general entertainment, factual entertainment and movie programming for distribution. The Television segment is engaged in the operation of broadcast television stations and the broadcasting of network programming in the United States. The Filmed Entertainment segment is engaged in the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media, and the production and licensing of television programming around the world. The Other, Corporate and Eliminations segment consists primarily of corporate overhead and eliminations, and other businesses.
Viacom Inc. offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Media Networks segment creates, acquires and distributes programming and other content for audiences The Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.
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