Critical Review: Salem Media Group (SALM) and Urban One (UONEK)

Salem Media Group (NASDAQ:SALM) and Urban One (NASDAQ:UONEK) are both small-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Dividends

Salem Media Group pays an annual dividend of $0.26 per share and has a dividend yield of 9.4%. Urban One does not pay a dividend. Salem Media Group pays out 118.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Salem Media Group and Urban One’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Salem Media Group 8.46% 2.42% 0.97%
Urban One 33.45% 85.34% 2.67%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Salem Media Group and Urban One, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Salem Media Group 0 1 1 0 2.50
Urban One 0 0 0 0 N/A

Salem Media Group presently has a consensus target price of $11.00, indicating a potential upside of 295.68%. Given Salem Media Group’s higher probable upside, equities research analysts clearly believe Salem Media Group is more favorable than Urban One.

Insider & Institutional Ownership

26.9% of Salem Media Group shares are held by institutional investors. Comparatively, 30.3% of Urban One shares are held by institutional investors. 60.0% of Salem Media Group shares are held by insiders. Comparatively, 50.5% of Urban One shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Salem Media Group has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, Urban One has a beta of -0.68, meaning that its share price is 168% less volatile than the S&P 500.

Earnings and Valuation

This table compares Salem Media Group and Urban One’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Salem Media Group $263.74 million 0.28 $24.64 million $0.22 12.64
Urban One $440.04 million 0.23 $111.88 million N/A N/A

Urban One has higher revenue and earnings than Salem Media Group.

About Salem Media Group

Salem Media Group, Inc. operates as a multimedia company in the United States. It operates through three segments: Broadcast, Digital Media, and Publishing. The company owns and operates radio networks, which produce and distribute talk, news, and music programming to radio stations, as well as sells commercial airtime. It also provides Christian and conservative content, investing and health-themed content, e-commerce, audio and video streaming, and other resources digitally through Christian content Websites, including BibleStudyTools.com, Crosswalk.com, GodVine.com, iBelieve.com, GodTube.com, OnePlace.com, Christianity.com, GodUpdates.com, CrossCards.com, ChristianHeadlines.com, LightSource.com, AllCreated.com, ChristianRadio.com, CCMmagazine.com, SingingNews.com, and SouthernGospel.com; and conservative opinion Websites, such as Townhall.com, HotAir.com, Twitchy.com, RedState.com, BearingArms.com, HumanEvents.com, and ConservativeRadio.com. In addition, the company publishes digital newsletters that provide market analysis and non-individualized investment strategies; and operates Church product Websites comprising SermonSpice.com, ChurchStaffing.com, WorshipHouseMedia.com, SermonSearch.com, WorshipHouseKids.com, Preaching.com, ChristianJobs.com, and Youthworker.com that offer digital resources to pastors and Church leaders, as well as operates Eagle Wellness, an e-commerce site that sells nutritional supplements. Further, it offers publication of conservative, Christian, and history books, such as Ann Coulter, Dinesh D'Souza, Newt Gingrich, David Limbaugh, Ed Klein, and Mark Steyn; Xulon Press, a print-on-demand self-publishing service; and Mill City Press and Bookprinting.com that publishes books, as well as Singing News print magazine. The company was formerly known as Salem Communications Corporation and changed its name to Salem Media Group, Inc. in February 2015. Salem Media Group, Inc. was founded in 1986 and is headquartered in Camarillo, California.

About Urban One

Urban One, Inc., together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Reach Media, Digital, and Cable Television. The Radio Broadcasting segment includes radio broadcasting operations that primarily target African-American and urban listeners. As of December 31, 2017, it owned and/or operated 56 broadcast stations located in 15 urban markets. The Reach Media segment operates operate radio stations, including the Tom Joyner Morning Show; and other syndicated programming assets, including the Rickey Smiley Morning Show, the Russ Parr Morning Show, and the DL Hughley Show, as well as Get Up! Mornings with Erica Campbell. This segment also operates BlackAmericaWeb.com, an African-American targeted news and entertainment website; and operates other event related activities. The Digital segment is involved in online business, including the operation of Interactive One, an online platform serving the African-American community through social content, news, information, and entertainment Websites, including Cassius, Bossip, HipHopWired, and MadameNoire digital platforms and brands. The Cable Television segment operates TV One, an African-American targeted cable television network. The company was formerly known as Radio One, Inc. and changed its name to Urban One, Inc. in May 2017. Urban One, Inc. was founded in 1980 and is based in Silver Spring, Maryland.

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