Critical Review: News (NASDAQ:NWS) and New York Times (NYT)

News (NASDAQ: NWS) and New York Times (NYSE:NYT) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Insider and Institutional Ownership

9.5% of News shares are owned by institutional investors. Comparatively, 67.9% of New York Times shares are owned by institutional investors. 39.4% of News shares are owned by company insiders. Comparatively, 5.7% of New York Times shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares News and New York Times’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
News $8.14 billion 1.18 -$738.00 million ($1.13) -14.56
New York Times $1.56 billion 1.94 $29.06 million $0.60 31.08

New York Times has lower revenue, but higher earnings than News. News is trading at a lower price-to-earnings ratio than New York Times, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for News and New York Times, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
News 0 0 1 0 3.00
New York Times 1 3 0 0 1.75

New York Times has a consensus target price of $13.93, suggesting a potential downside of 25.29%. Given New York Times’ higher probable upside, analysts plainly believe New York Times is more favorable than News.

Profitability

This table compares News and New York Times’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
News -7.96% 2.27% 1.74%
New York Times 6.02% 13.46% 5.37%

Volatility and Risk

News has a beta of 1.95, meaning that its share price is 95% more volatile than the S&P 500. Comparatively, New York Times has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500.

Dividends

News pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. New York Times pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. News pays out -17.7% of its earnings in the form of a dividend. New York Times pays out 26.7% 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. New York Times has raised its dividend for 3 consecutive years. News is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

New York Times beats News on 9 of the 17 factors compared between the two stocks.

About News

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 New York Times

The New York Times Company is a media company focused on creating, collecting and distributing news and information. The Company’s principal business consists of distributing content generated by its newsroom through its print, Web and mobile platforms. In addition, it distributes selected content on third-party platforms. The Company includes newspapers, print and digital products and investments. The Company’s businesses include newspapers, such as The New York Times (The Times); Websites, including NYTimes.com; mobile applications, including The Times’s news applications, as well as interest-specific applications, such as NYT Cooking, Crossword and others, and related businesses, such as The Times news services division, product review and recommendation Websites The Wirecutter and The Sweethome, digital archive distribution, NYT Live (its live events business) and other products and services under The Times brand.

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