Sirius XM (NASDAQ: SIRI) and Entercom Communications (NYSE:ETM) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitability, risk, analyst recommendations, institutional ownership, dividends and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Sirius XM and Entercom Communications, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sirius XM 2 5 10 0 2.47
Entercom Communications 0 0 1 0 3.00

Sirius XM presently has a consensus target price of $6.15, indicating a potential downside of 2.44%. Given Sirius XM’s higher probable upside, research analysts plainly believe Sirius XM is more favorable than Entercom Communications.

Risk and Volatility

Sirius XM has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Entercom Communications has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500.

Dividends

Sirius XM pays an annual dividend of $0.04 per share and has a dividend yield of 0.6%. Entercom Communications pays an annual dividend of $0.36 per share and has a dividend yield of 3.5%. Sirius XM pays out 20.0% of its earnings in the form of a dividend. Entercom Communications pays out -80.0% 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. Entercom Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

20.0% of Sirius XM shares are owned by institutional investors. Comparatively, 84.6% of Entercom Communications shares are owned by institutional investors. 1.1% of Sirius XM shares are owned by company insiders. Comparatively, 32.6% of Entercom Communications 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 and Valuation

This table compares Sirius XM and Entercom Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sirius XM $5.43 billion 5.22 $647.90 million $0.20 31.50
Entercom Communications $592.88 million 2.37 $233.84 million ($0.45) -23.11

Sirius XM has higher revenue and earnings than Entercom Communications. Entercom Communications is trading at a lower price-to-earnings ratio than Sirius XM, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sirius XM and Entercom Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sirius XM 13.26% -76.24% 11.74%
Entercom Communications 39.55% 0.08% 0.03%

Summary

Sirius XM beats Entercom Communications on 9 of the 16 factors compared between the two stocks.

About Sirius XM

Sirius XM Radio Inc. broadcasts its music, sports, entertainment, comedy, talk, news, traffic and weather channels in the United States on a subscription fee basis through its two satellite radio systems. Subscribers can also receive certain of its music and other channels over the Internet, including through applications for mobile devices. As of December 31, 2011, it had 21,892,824 subscribers. Its subscribers include subscribers under its regular and discounted pricing plans; subscribers that have prepaid, including payments made or due from automakers for subscriptions included in the sale or lease price of a vehicle; radios activated for daily rental fleet programs, and subscribers to its Internet services who do not also have satellite radio subscriptions. In January 2013, Liberty Media Corporation announced it held 50.7% interest of the Company.

About Entercom Communications

Entercom Communications Corp. operates as a radio broadcasting company in the United States. The company owns and operates radio stations in various formats, such as news, sports, talk, classic rock, urban, adult contemporary, alternative, country, and others. As of February 20, 2018, it had a portfolio of approximately 235 radio stations, digital platforms, and live events. Entercom Communications Corp. was founded in 1968 and is headquartered in Bala Cynwyd, Pennsylvania.

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